Buying insurance after a smart contract is attacked won't work. The core reason is that DeFi insurance claims work just like traditional insurance: there are clear "coverage period" and "waiting period" limits. Coverage only applies to events after the policy becomes effective, and there is a 14-day cooling-off period for claims. These rules are clearly written in the policy terms. Take Nexus Mutual as an example: the platform requires policyholders to suffer a loss during the coverage period to be eligible to file a claim.
Coverage Only Starts When the Policy Begins
DeFi insurance is not a "pay-after-the-fact" solution. You buy risk protection for a specific time window, which covers events like hacks or oracle failures that happen after the policy starts. If the attack occurred before the policy's start date, you don't meet the conditions for a claim.
There Are Additional Claim Requirements
Even if your policy was active when the attack happened, you can't file a claim immediately:
Claim filing window: You have up to 35 days after the policy expires to submit a claim, as long as the loss occurred while the policy was active.
14-day cooling-off period: After a loss occurs, you must wait 14 days before formally submitting a claim. This reduces the chance of mistaken or rushed claims and gives everyone time to verify the event.
Deductible: There is a default 5% deductible. For example, with 100 ETH coverage, if your loss is 5 ETH or less, you get nothing.
Important: DeFi insurance claims are not automatic. At Nexus Mutual, claims are voted on by token-holding members, who put their own capital at risk when voting to approve a payout. This creates a natural bias toward denying claims. InsurAce also relies on community voting and charges a small administrative fee. From top platforms like Nexus Mutual to InsurAce, claims always go through a community vote or committee review—they are not triggered automatically like a smart contract payout.
If Your Claim Is Denied, You Lose the Deposit
When you submit a claim, you must pay a deposit in ETH, minimum 0.05 ETH, maximum the equivalent of 50 NXM in ETH. If your claim is approved, the deposit is returned together with the payout. If the claim is denied, the deposit is not refunded. This rule prevents users from filing many false claims without any real loss.
Common Reasons Claims Fail
Many people mistakenly think DeFi insurance can be bought after a problem happens, but policies have strict time limits on coverage. Another common oversight is forgetting that claims require a community vote to pass—they are not settled automatically by a smart contract.
What You Should Do Next
If you hold assets in a protocol and are worried about risks, buy insurance before depositing your funds. When buying a policy, check two things: make sure the protocol you want to cover is actually listed (Nexus Mutual offers single-protocol and multi-protocol coverage); and calculate whether the net benefit after deducting premiums and the 5% deductible still makes sense. If you've already suffered a loss and are only now thinking about insurance, you can contact the project team or the insurance protocol's support to ask if there is any special process—but don't get your hopes up.
