OH / Cryptocurrency

Bitcoin constitutes “property” under homeowner’s policy

An Ohio trial court, on an issue of first impression under Ohio law, held that Bitcoin is recognized as property under a homeowner’s policy and not money.  Therefore, a homeowner’s claim for stolen Bitcoin was not subject to the sublimit under the policy for money.

James Kimmelman submitted a claim to his homeowner insurer, Wayne Insurance Group (“Wayne”), reporting Bitcoin was stolen from his account in the amount of approximately $16,000.  Wayne investigated the claim and awarded Kimmelman $200, as it determined Bitcoin was “money” and governed by the policy’s sublimit for losses of money.  Kimmelman sued Wayne for breach of contract and bad faith, arguing that Bitcoin is characterized as property under the policy and not subject to the $200 limit.  Wayne sought judgment on the pleadings, asserting its assessment of Bitcoin as “money” was proper.

To support its argument that Bitcoin is money, Wayne referenced articles from CNN, CNET, and the New York Times.  Wayne also supported its position with a document from the IRS relating to the taxation of Bitcoin, which referred to it and other electronic property as “virtual currency.”  However, the same IRS document stated that “[f]or federal tax purposes, virtual currency is treated as property.”  The trial court found it persuasive that the IRS classified Bitcoin as property and held that the court would recognize it in the same way.  Wayne’s motion for judgment on the pleadings was denied.  Kimmelman v. Wayne Ins. Group, No. 18 CV 1041 (C.P. Franklin Cnty. Ohio Sep. 25, 2018).