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Not many people had insurance on assets locked up in bZx’s Fulcrum, but after a bug yielded an exploit of its smart contract, a couple of accounts that did were covered by Nexus Mutual, the London-based crypto insurance company who paid out on two claims worth approximately $31,000.
Right now, people can take out policies against any valid smart contract on ethereum. The policies are just bets against whether or not the smart contract will fail in some way. "It's not like an indemnity contract, where we only cover the actual loss," Karp explained. That is, it doesn't work like most insurance that retail customers would be familiar with from the analog world. In fact, a person doesn't even need to be a user of a smart contract to take out a policy. They just name an amount of insurance, a time period and a smart contract. Then Nexus gives them a price. If an exploit occurs on a smart contract that mutual members agree represents a failure of the smart contract, then policies get paid out. In that way, it's basically a bet on the soundness
