DeFi Insurance: How to Get Reimbursed After a Crypto Hack

ByVictor
assurance-defi-hack-crypto-2026

📋 TL;DR

  • DeFi insurance protocols (Nexus Mutual, InsurAce, Unslashed) allow you to recover your funds after a hack
  • Nexus Mutual has paid out over $18M in claims (FTX: $4.9M, Euler: $2.4M, Rari: $5M)
  • Premiums: 1-4% per year of the covered amount depending on the protocol and risk level
  • Procedure: purchase coverage BEFORE the incident, file claim within 35 days with on-chain proof
  • Not covered: phishing, private key theft, rug pulls, user errors

What Is DeFi Insurance?

DeFi (decentralized finance) insurance is a mechanism that allows users to protect themselves against losses related to technical flaws, hacks, or failures of decentralized protocols.

Unlike traditional insurance, these protocols operate in a decentralized manner:

  • Risk pooling: capital providers (underwriters) deposit funds into pools
  • Token governance: token holders vote on claims
  • On-chain transparency: all operations are verifiable on the blockchain

What Does DeFi Insurance Cover?

According to 2026 data, here is the breakdown of claims by incident type:

Covered Events (65% of Claims)

  • Smart contract exploits: code vulnerabilities exploited by hackers
  • Logic errors: bugs allowing funds to be drained
  • Upgrade issues: failed upgrades compromising security
  • Governance attacks: malicious takeover of voting mechanisms
  • Oracle manipulation: falsification of price data

Stablecoin Depeg (22% of Claims)

Loss of parity between stablecoins and their reference asset (usually the dollar) can be covered. Recent events (UST/Luna) have made this coverage highly sought after.

Bridge and Oracle Failures (10% of Claims)

Cross-chain bridges and data oracles represent critical vulnerability points, regularly targeted by attackers.

What Is NOT Covered

  • Phishing and user errors: if you sign a malicious transaction, no insurance will cover you
  • Private key theft: compromise of your personal wallet is not covered
  • Rug pulls: intentional scams by project teams are generally excluded
  • Malware: infections of your device are not indemnifiable

Main DeFi Insurance Protocols

Nexus Mutual: The Historical Leader

Nexus Mutual is the most established DeFi insurance protocol, with over $18 million in claims paid since 2019.

Strengths:

  • Proven track record (FTX: $4.9M, Euler: $2.4M, Rari: $5M)
  • Conservative coverage/capital ratio (under 3:1)
  • Transparent and decentralized claims process

Weaknesses:

  • Mandatory KYC + membership fee (0.002 ETH)
  • Payment delays of several days to weeks

InsurAce: The Accessible Multi-Chain Option

InsurAce stands out with its multi-chain coverage, offering contracts on over 140 protocols across 20+ blockchains.

Strengths:

  • $150M TVL spread across Ethereum, BNB Chain, Arbitrum
  • Competitive premiums (1-4%)
  • “Portfolio Cover” product covering multiple protocols in one contract
  • 35% premium growth in 2025 thanks to depeg coverage

Weaknesses:

  • Counterparty risk exposure (underwriters)
  • Some centralized components

Unslashed Finance: Fast Parametric Insurance

Unslashed takes a different approach with parametric insurance: payments are automatically triggered by verifiable on-chain conditions.

Strengths:

  • $700M+ coverage capacity
  • Near-instant payouts (minutes vs days)
  • Premiums of 1.5-3%
  • Specialized in slashing protection (staking)
  • Neutral arbitration via Kleros

Weaknesses:

  • Only oracle-verifiable events are covered
  • Opaque pricing model

Protocol Comparison

Aggregator: Bright Union allows you to compare offers from Nexus Mutual, InsurAce, and Unslashed in one place.

How to Subscribe to DeFi Insurance

Here is the step-by-step procedure with Nexus Mutual (similar on other protocols):

Step 1: Become a Member

  • Connect to nexusmutual.io
  • Complete the standard KYC/AML procedure
  • Pay the membership fee (0.002 ETH, approximately $5-6)

Step 2: Choose Your Coverage

  • Select the protocol to cover (Aave, Uniswap, Curve, etc.)
  • Define the desired coverage amount
  • Choose the duration (30, 90, 180, 365 days)

Step 3: Pay the Premium

Premiums vary according to:

  • The covered protocol (riskier = more expensive)
  • The coverage amount
  • The duration
  • Available capacity in the pool

Generally expect 1 to 4% per year of the covered amount.

Step 4: Keep Your Proof

Keep a record of:

  • Your coverage NFT (if applicable)
  • The covered wallet addresses
  • Deposit transactions on the insured protocol

How to File a Claim After a Hack

If an incident occurs on a protocol you have insured, here is the procedure:

Important Deadlines

  • Minimum waiting period: 72 hours after the incident (90 days for Custody Cover)
  • Maximum deadline: 35 days after the end of your coverage period (120 days for Custody Cover)

Claim Procedure (Nexus Mutual)

1. Describe the incident

  • Explain the nature of the loss
  • Provide screenshots and off-chain evidence
  • Document the amount lost

2. Prove ownership of affected wallets

You must demonstrate that you control the addresses that suffered losses. Two methods:

  • Sign a cryptographic message from the affected wallet
  • Perform a 0 ETH transaction to a specified address

3. Submit on-chain evidence

  • Hash of relevant transactions
  • Wallet addresses involved
  • Links to blockchain explorers

Evaluation Process

Once submitted, your claim goes through several stages:

  1. Initial vote (36-72h): Claims Assessors examine the evidence and vote
  2. Validation threshold: >70% consensus required, with staked capital >5x the claim amount
  3. Second round (if necessary): all DAO members can vote
  4. Payment or rejection: final decision within 3 to 6 days

In Case of Rejection

If your claim is rejected, you can submit a second claim with additional evidence. This is the equivalent of an appeal.

Case Studies: Famous Claims

Euler Finance Hack (March 2023) – $2.4M Paid

After the $197 million hack on Euler Finance, Nexus Mutual paid out $2.4 million to insured victims. Notable fact: when the stolen funds were partially returned, Nexus Mutual requested reimbursement of the indemnities paid, creating an unprecedented legal situation.

FTX Collapse (November 2022) – $4.9M Paid

Users who had subscribed to “Custody Cover” for FTX were able to recover part of their funds through Nexus Mutual, while uninsured creditors are still waiting for bankruptcy proceedings.

Rari Capital Exploit (April 2022) – $5M Paid

One of the largest claims in DeFi insurance history, following the exploitation of a vulnerability in Rari Capital’s Fuse pools.

How Much Does DeFi Insurance Cost?

Here are example premiums for $10,000 of coverage over 1 year:

  • Aave (established protocol): ~$150-200 (1.5-2%)
  • Uniswap: ~$150-250 (1.5-2.5%)
  • Recent/risky protocol: ~$300-400 (3-4%)
  • Stablecoin depeg coverage: variable depending on issuer

Premiums are dynamic and vary according to supply and demand for coverage.

Is DeFi Insurance Worth the Cost?

It’s a matter of personal risk management. Consider:

Arguments for:

  • DeFi hacks exceeded $3 billion in 2025
  • Even “blue chip” protocols can be exploited
  • The cost is often less than the yield generated
  • Peace of mind for large amounts

Arguments against:

  • User errors are not covered
  • Potentially complex claims process
  • Counterparty risk on the insurance protocol itself
  • For small amounts, the cost may be disproportionate

Rule of thumb: consider insurance if your DeFi positions represent more than $10,000 or a significant portion of your crypto portfolio.

FAQ: DeFi Insurance

Can I subscribe to insurance after a hack?

No. Like any insurance, coverage must be active BEFORE the incident. You cannot subscribe retroactively. This is why it’s important to anticipate and cover your positions from the moment of deposit.

Is DeFi insurance regulated?

DeFi insurance protocols operate in a regulatory gray area. Nexus Mutual is registered as a mutual in the United Kingdom, which gives it some legitimacy. Other protocols are generally DAOs without clear legal status.

What happens if the insurance protocol itself is hacked?

This is the ultimate counterparty risk. In 2020, the founder of Nexus Mutual was himself the victim of a targeted attack. Mature protocols have audits, bug bounty programs, and reserve funds for this type of situation, but zero risk does not exist.

Do I need to report my insurance payouts for taxes?

The tax treatment of crypto insurance payouts varies by jurisdiction. Consult a specialized accountant. In principle, compensation for a loss should not constitute taxable income, but the situation is complex and depends on local regulations.

Do insurance protocols cover NFTs?

Few protocols offer specific NFT coverage. Etherisc offers customized policies for DAOs and atypical cases. For high-value collections, custom solutions can be negotiated.

Can I be a capital provider (underwriter)?

Yes, it’s actually an interesting yield strategy. By depositing funds in insurance pools, you earn a portion of the premiums paid by the insured. Caution: in case of a validated claim, your capital may be used to compensate victims.

Sources

This article is provided for informational purposes only and does not constitute financial or legal advice. DeFi insurance carries its own risks. Do your own research before subscribing to coverage.