Ask the Adviser: How do I know if my investments are insured? - Rodgers & Associates

Ask the Adviser: How do I know if my investments are insured?

Q: How do I know if my invest­ments are insured?

A: Your brokerage invest­ments are insured by the Securities Investor Protection Corpo­ration (SIPC). However, it’s important to under­stand that this is not the same as Federal Deposit Insurance Corpo­ration (FDIC).


FDIC insurance provides protection to depos­itors at an FDIC insured bank in the event the bank fails. Banks fund this program by paying premiums to the United States government, which provides the insurance. FDIC insurance applies to checking, savings, money markets, and CDs. Each depositor is provided up to $250,000 based on ownership categories.

The SIPC works differ­ently. The SIPC was created in 1970 and is a non-profit membership organi­zation. Therefore, it is not backed by the United States government. Basically, the SIPC is an insurance fund which is paid into by SIPC-insured brokers. In the event of a failed brokerage firm, the SIPC protects investor assets up to $500,000.

SIPC Coverage

Coverage under the SIPC protects cash and securities up to $500,000, which includes a $250,000 limit on cash and is based on accounts held in separate capacity. An example of accounts held in separate capacity would be an individual brokerage account and an individual retirement account (IRA). Both of these accounts would be protected up to $500,000 in the event of a failed brokerage firm.

Covered Securities

A full list of covered securities can be found at www​.sipc​.org/​f​o​r​-​i​n​v​e​s​t​o​r​s​/​w​h​a​t​-​s​i​p​c​-​p​r​otects. However, the most common types of covered securities are:

  • Individual stocks
  • Bonds
  • Treasury securities
  • Certifi­cates of deposit
  • Mutual funds
  • ETFs
  • Money market mutual funds

What Is Not Covered

Bad advice, worthless securities, market declines, commodity futures, fixed annuities, hedge funds, and losses due to fraud­ulent activity are not insured through SIPC.

As an investor, you do not need to worry if you’re covered—if you have your invest­ments through a SIPC member brokerage firm, coverage is automatic. The limits are set by the Securities Investor Protection Act (SIPA). While an individual investor cannot purchase additional insurance, most major brokerage firms purchase something called excess coverage that provides investors with higher protection limits than the SIPC limits.