A Cover is a decentralized alternative to an insurance policy. It is not the same as insurance because it is a permissionless process where anyone from the community can provide the required capital. The rules of the cover are executed by a smart contract on the blockchain.
Bright Union is a protocol which helps customer buy and manage their covers from a single place. In case a claimable event happens , the risk platform and not Bright Union is liable for the payment of the claim.
The cover types are described on this page: https://docs.brightunion.io/buying-coverage/cover-types
The risk platforms determine whether a cover for a certain protocol is added based on an admission or whitelisting process. Usually the (code) quality of the protocols before it is offered for sale. In order to buy a cover the community must have provided sufficient cover capital so claims can be paid in case of a claimable event. In case there is limited capital available it might not be possible to buy a certain cover or a higher price will be demanded.
Once a claim is approved (link to claims process) the claim will be paid out from the capital provided by the community. Each risk platform has a different approach to managing and leveraging the capital provided by the community.
Last updated
