Whether "technical failure" in an insurance policy covers oracle failure depends on the specific insurance protocol and its product version. The latest practice is that some leading protocols have included oracle attacks in their coverage, but this is not automatic—you need to carefully check the terms when buying insurance.
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Protocols Have Begun Covering Oracle Risks
Nexus Mutual, a representative DeFi insurance protocol, launched a new Protocol Cover version in 2025, explicitly extending coverage from smart contract attacks to oracle attacks, economic incentive attacks, governance attacks, and other risks.
Looking at historical data, smart contract vulnerabilities have been the main cause of claims (accounting for 68.2% of total payouts), while oracle failures account for a relatively low share (11.3%). This is linked to some protocols using high-quality oracles like Chainlink, whose average claim rate is 40% lower than the industry benchmark. However, this does not mean oracle failure is unimportant—it's just that the scale of losses is usually not as severe as with smart contract vulnerabilities.
The Claims Mechanism Determines the Final Outcome
Even if a policy says "technical failure" includes oracle failure, it doesn't mean an automatic payout. As an insurer, Nexus Mutual requires claims to be reviewed by an assessment committee (payments are not obligatory), and there is a 14-day cooling-off period.
Claimants must provide proof of loss, demonstrating ownership and control of the affected address, and verify it via a signed message. If the issue was only "a short-term oracle price deviation" without a real, quantifiable loss, it may not meet the claim conditions.
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Points to Note
Different insurance protocols define their terms differently. Some use real-time oracle data to trigger automatic payouts, which can be completed within minutes of a risk event. Before buying insurance, check whether the policy explicitly lists "Oracle Failure" as a covered event. If the terms only say "technical failure" but do not specifically mention oracle attacks, there is a risk of claim denial.
Common Reasons for Failure: The biggest misconception is thinking "technical failure" is a catch-all term. In reality, most policies require specific covered event types to be listed; a generic clause often means that scenario is not covered. Another issue is that even if a covered event occurs, a community voting mechanism in the claims process may lean toward denial, leaving you without a payout.
Next Steps: Before buying insurance, check the current version of the Coverage Terms on the insurance protocol's website. Confirm whether "Oracle Attack" or "Oracle Failure" is explicitly listed as a covered event. For example, for Nexus Mutual products, confirm if you are purchasing the new Protocol Cover. If unsure, contact customer support directly for clarification before purchasing.
