[whamlastxmas]

>Coinbase's insurance policy would respond in the event that bitcoin stored in Coinbase was lost or stolen as a result of a breach of our physical security, cyber security, or as a result of employee theft

Potentially not covered:

Non-theft malfeasance

Negligence

Bankruptcy

Seizures by foreign governments

Technical problems leading to loss of data

Someone at Coinbase not liking you and wiping out your account

Unauthorized access to your account that doesn't count as a breach of security (your link specifically mentions this one as not covered)

Violation of terms of service leading to forfeiture of account and balance

And probably tons of others I haven't thought of. I know most of these are unlikely, but still very possible. Someone losing their FDIC insured bank account balance due to any of the above is virtually unheard of as long as the consumer exercises their legal protections. Keeping $25k at Coinbase is just as risky as keeping it at Paypal, and we all know how much Paypal loves permanently freezing accounts.