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Recently Coinbase's Chief Information Security Officer (CISO), Philip Martin, posted to the company blog about the nature of cryptocurrency insurance and a bit about Coinbase's approach over the last several years. The biggest revelation was that Coinbase maintains a $255 million policy to cover all of their "hot wallets."
A hot wallet basically means any crypto wallet that is accessible from the internet, even if behind security features. By comparison, a "cold wallet," would constitute something that is only accessible physically, like seed words stored securely.
Throughout the blog post, Martin discusses different types of insurance and how they relate to crypto. For example, Crime and Specie type policies. In a nutshell, Specie policies tend more towards "value at rest" type situations. This would include gold in a vault, valuable art in a case in a museum, and crypto cold storage.
Alternatively, Crime policies are more for "value in transit," such as money in armored cars, cash in ATMs, and crypto hot wallets. It is this type of policy that Coinbase feels it needs as a blanket for all customers.
When it comes to cold storage, the company feels it is more of a case by case basis for customers, as the rates are different and the threat is generally much lower.
Ultimately, Martin makes the case for why they insure all hot wallets but treat cold storage differently. It is a fascinating read, and gives insight into how the company works. Will it be enough to protect Coinbase in the future? Only time will tell.