FDIC vs SIPC coverage
By Jude Wallis
FDIC insurance covers eligible deposits at an insured bank. SIPC covers missing securities and cash at a failed brokerage, with a different cap. $280,000 against a $250,000 one-category FDIC cap leaves $30,000 uninsured. The same $280,000 against a $500,000 cap sits inside the limit.
| FDIC | SIPC | |
|---|---|---|
| What is protected | Eligible deposits if the bank fails. | Missing assets if the broker fails. Not a decline in market price. |
| Teaching cap on this sheet | $250,000 | $500,000 |
| \$280,000 balance | $250,000 covered, $30,000 uninsured. | $280,000 covered, $0 uninsured. |
| Stocks and funds | Not deposits. | Securities can sit in the SIPC bucket. Market loss still sits with the owner. |
On this page
Two caps, two failures
FDIC is a bank-failure identity. SIPC is a broker-failure identity. Putting a brokerage cash sweep next to a bank savings balance without naming the wrapper mixes the two.
On this teaching sheet both use the same coverage arithmetic: covered is the lesser of the balance and the cap, uninsured is the rest. How FDIC insurance works is the deposit explainer. The FDIC insurance calculator is that split.
SIPC is not a floor under the market
If a share is still in the account and the price fell, SIPC does not write a cheque for the decline. If the share is missing because the firm failed, the coverage identity on this sheet is the cap against the position's value.
Liquidity is how fast an asset can be spent. Coverage is what happens if the institution closes. This is educational material, not financial advice.
Worked examples
FDIC cap of \$250,000
Eligible deposits are $280,000. The one-category cap is $250,000. What is covered, and what is uninsured?
- Covered is the cap, $250,000, because the balance is larger.
- Uninsured is $280,000 minus $250,000, which is $30,000.
Covered is $250,000. Uninsured is $30,000 on a $280,000 balance.
A \$500,000 teaching cap
The same $280,000 balance against a $500,000 cap. What is covered, and what is uninsured?
- The balance sits under the cap, so covered is the whole $280,000.
- Uninsured is $0.
Covered is $280,000. Uninsured is $0 against a $500,000 cap.
Common questions
Does SIPC cover a market loss?
No. It covers missing assets if the broker fails. A still-held share that fell in price is a market result.
Is the \$500,000 figure this year's SIPC statute?
It is a teaching cap on this sheet so the same coverage identity can be compared. Look up the live SIPC limit for an actual account.
Is this financial advice?
No. Educational material.
Keep reading
This page is educational material, not financial advice. The figures come from the formula shown and assume the inputs you enter hold for the whole term. Your own rate, fees, taxes and timing will differ, so treat the output as arithmetic to check a decision against, not as a recommendation.