Cryptocurrency and bitcoin security has always been a fickle thing in terms of insurance. With more than 7% of Americans owning cryptocurrency, the demand for this relatively secure asset is still on the rise. As the global interest in cryptocurrency increases, governments are also looking at the asset closely now.
Kimmelman v. Wayne Insurance Group is a prime example of what we just discussed.
The asset has also found its way into many a financial and legacy planning discussions as people continue to consider it a viable option for their investment portfolio.
However, the question remains; can you rely on your insurance agents to protect you or your family in case of unexpected loss of cryptocurrency?
Answer to this lies in the case we mentioned above. To put it simply, it depends on whether your cryptocurrency is held in the capacity of property or money.
Bitcoin Security From Insurance Agencies
In the case above, Kimmelman sought coverage for his bitcoin portfolio that amounted to roughly $16,000, which was recently stolen.
The insurer’s policy claimed that they cover “personal property owned or used by an insured anywhere in the world.”Furthermore, the liability would be limited to $200 on money, bank notes, gold, silver, value cards and more according to the same document.
Insurance agent’s investigators concluded that the bitcoin was money, and therefore a compensation of only $200 was sanctioned.
Soon after, the two found themselves in court, one claiming that it was money and the other simply claiming compensation. The Ohio state court determined that the insurer would make the insured whole since virtual currency was not considered money, but property.
This was solely based on IRS Notice 2014-21 which treated cryptocurrency as property for tax purposes, not money. From then onwards, any unexpected loss on ‘virtual currency’ – including bitcoin – is considered to be a loss of property.
Cryptocurrency Finding Its Way Into Legacy Planning
The rise of virtual currency began in 2015 and gradually found its way to where it is now, the peak point being in 2017. Although the currency’s value keeps fluctuating every now and then, people who purchased the currency back when it was cheap have gained immensely from it.
So, it’s natural for them to want to pass it on to their loved ones after their death. We have had many clients who are including cryptocurrency in legacy planning with a prime focus on bitcoin security.
Armour Legacy offers you a safe place to get a will made and store information about how to access your assets after you’ve passed on. Our vaults are secure and flexible, meaning you can give access to people you trust, be it family, your health executives, financial advisors and more.
The idea is to make sure your family doesn’t have to go through any sort of hassle after you pass on and get what you want them to have seamlessly! Let us help you understand how this works in more detail. Write to us and we’ll call you right back!