diff --git a/CHANGELOG.md b/CHANGELOG.md
index 2c5cf3661..4406ba6b0 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -88,6 +88,8 @@ IMPROVEMENTS / BUG FIXES:
     copy issues. [GH-1199]
   - Vagrant works properly in folders with strange characters. [GH-1223]
   - Vagrant properly handles "paused" VirtualBox machines. [GH-1184]
+  - Better behavior around permissions issues when copying insecure
+    private key. [GH-580]
 
 ## 1.0.6 (December 21, 2012)
 
diff --git a/lib/vagrant/environment.rb b/lib/vagrant/environment.rb
index f64ae84f3..fb6881594 100644
--- a/lib/vagrant/environment.rb
+++ b/lib/vagrant/environment.rb
@@ -592,8 +592,17 @@ module Vagrant
     def copy_insecure_private_key
       if !@default_private_key_path.exist?
         @logger.info("Copying private key to home directory")
-        FileUtils.cp(File.expand_path("keys/vagrant", Vagrant.source_root),
-                     @default_private_key_path)
+
+        source      = File.expand_path("keys/vagrant", Vagrant.source_root)
+        destination = @default_private_key_path
+
+        begin
+          FileUtils.cp(source, destination)
+        rescue Errno::EACCES
+          raise Errors::CopyPrivateKeyFailed,
+            :source => source,
+            :destination => destination
+        end
       end
 
       if !Util::Platform.windows?
diff --git a/lib/vagrant/errors.rb b/lib/vagrant/errors.rb
index 85952de94..14b7274e6 100644
--- a/lib/vagrant/errors.rb
+++ b/lib/vagrant/errors.rb
@@ -143,6 +143,10 @@ module Vagrant
       error_key(:config_upgrade_errors)
     end
 
+    class CopyPrivateKeyFailed < VagrantError
+      error_key(:copy_private_key_failed)
+    end
+
     class DestroyRequiresForce < VagrantError
       error_key(:destroy_requires_force)
     end
diff --git a/templates/locales/en.yml b/templates/locales/en.yml
index a7a5a3298..3f04c3195 100644
--- a/templates/locales/en.yml
+++ b/templates/locales/en.yml
@@ -80,6 +80,14 @@ en:
       config_upgrade_errors: |-
         Because there were errors upgrading your Vagrantfiles, Vagrant
         can no longer continue. Please fix the errors above and try again.
+      copy_private_key_failed: |-
+        Vagrant failed to copy the default insecure private key into your
+        home directory. This is usually caused by a permissions error.
+        Please make sure the permissions of the source is readable and
+        the destination is writable.
+
+        Source: %{source}
+        Destination: %{destination}
       destroy_requires_force: |-
         Destroy doesn't have a TTY to ask for confirmation. Please pass the
         `--force` flag to force a destroy, otherwise attach a TTY so that