Running a small business means juggling a lot—cash flow, payroll, expenses—and the last thing you need is uncertainty about whether your money is safe if something goes wrong. That’s where SIPC and FDIC insurance come in.
FDIC insurance protects your bank deposits if your financial institution collapses. SIPC insurance, on the other hand, comes into play when your investment firm fails. If you’re not clear on the differences, you could mistakenly assume you’re covered when you’re not.
Let’s break down what each type of insurance covers, why it matters, and what every small business owner needs to know.
What you need to know
- FDIC insurance protects up to $250,000 in bank accounts (like checking and savings) per depositor per insured bank in case the bank fails.
- SIPC insurance covers up to $500,000 in brokerage accounts (including $250,000 for cash) if a SIPC member investment firm fails—not for market losses.
- Use FDIC for business cash and SIPC for investments—each protects different assets, so know where your money is held and what’s actually covered.
SIPC vs. FDIC insurance
Though they both offer protection for your business assets, FDIC and SIPC insurance have their differences. FDIC insures deposit accounts with a financial institution or bank, while SIPC insurance protects your brokerage account assets such as ETFs, stocks, and bonds.
They also have different coverage limits. For example, the FDIC will reimburse losses up to $250,000 for each type of account ownership category at each insured bank you have funds. SIPC coverage provides up to $500,000 in protection for security accounts or $250,000 for cash reserves.
| SIPC | FDIC | |
|---|---|---|
| What it protects | Securities and cash in brokerage accounts | Deposits in bank accounts |
| Account types covered | Stocks, bonds, mutual funds, ETFs, brokerage cash | Checking, savings, CDs, money market deposit accounts |
| Coverage limit | Up to $500,000 total (including $250,000 for cash) | Up to $250,000 per depositor per bank per ownership category |
| When it applies | Brokerage firm failure or missing assets at an SIPC member firm | Bank failure at an FDIC-insured bank |
| What’s not covered | Market losses, fraud, or bad investments | Investments, crypto, or losses due to theft or fraud |
| How to access it | Automatically applies if broker is an SIPC member | Automatically applies if bank is FDIC-insured |
What is SIPC insurance?
Securities Investor Protection Corporation (SIPC) insurance is a protection that kicks in if your brokerage firm fails financially and can’t return your investments or cash. It doesn’t cover losses from the stock market or bad investment choices—only the risk of the brokerage going under.
How SIPC insurance works
SIPC provides limited protection if a SIPC member brokerage firm fails financially. In such cases, SIPC steps in to help recover missing cash and securities held in a brokerage account—up to $500,000 per customer, which includes a maximum of $250,000 for cash.
Bluevine Tip
Not all brokerages are SIPC members. To check if yours is covered, look for the SIPC logo on the firm’s website or search for the firm directly on SIPC.org.
For example, if you owned 10 shares of a stock when the firm closed, SIPC would return those 10 shares—even if the stock’s value changed.
To receive compensation, you must file a claim within a set deadline. A court-appointed trustee will then review your claim and issue a determination letter stating whether it’s approved or denied. If approved and you accept the outcome, SIPC will arrange for the return of your assets, either through cash reimbursement or the delivery of replacement securities.
What SIPC insurance does and doesn’t cover
SIPC insurance covers up to $250,000 in cash and up to $500,000 in securities held by each SIPC member brokerage where you have an account.
The types of securities covered by SIPC include:
- Certificates of deposit (CDs)
- Treasury securities
- Stocks and bonds
- Money market funds
- Mutual funds
SIPC does not protect commodity futures contracts, investment contracts like limited partnerships, foreign exchange trades, or fixed annuity contracts not registered with the SEC. SIPC coverage also doesn’t protect you against investments that lose you money, as that’s part of the inherent risk of investing.
What is FDIC insurance?
FDIC insurance is a type of protection for the money you keep in a bank account. It’s provided by the Federal Deposit Insurance Corporation (FDIC), a U.S. government agency that steps in if your bank ever fails—meaning if the bank runs out of money or shuts down unexpectedly.
Let’s say you have $100,000 in your business checking account and the bank suddenly goes under. As long as that bank is FDIC-insured, your money is fully protected. The FDIC typically reimburses customers within a few business days. FDIC coverage also extends to certain retirement accounts, like IRAs, held at FDIC-insured banks, protecting deposits up to applicable limits.
What FDIC insurance does and doesn’t cover
FDIC insurance will cover, dollar-for-dollar, up to $250,000 per depositor at an insured institution. This includes deposits made into:
- Checking accounts
- Savings accounts
- Money market deposit accounts
- CDs
- NOW accounts
- Official bank checks, such as money orders and cashier’s checks
If you have deposits at the same financial institution under the same ownership category, the collective deposits are insured up to the FDIC insurance limit of $250,000. This means that if your deposits are held with the same insured bank but deposited at different branches, the amounts fall under one account ownership.
The scope of FDIC coverage does not include:
- Mutual funds
- Stock investments
- Bonds
- Annuities
- Municipal securities
- U.S. Treasury notes
- Safe deposit boxes or their contents
- Cryptocurrency assets
Did you know?
Bluevine offers additional FDIC protection up to $3 million through a sweep network, which distributes your deposits across multiple FDIC-insured bank partners to expand your coverage.
Have peace of mind with an FDIC-insured business checking account
Need a reliable place to manage your money? Bluevine Business Checking accounts are FDIC-insured up to $3,000,000 through Coastal Community Bank, Member FDIC and a sweep network.BVSUP-00108
You can also explore our guide on what to look for in a business checking account to compare your options.
The business checking account that empowers you to bank with confidence.
SIPC vs. FDIC FAQs
Still have questions about how SIPC and FDIC insurance work? Here are quick answers to some of the most common questions small business owners ask.
Are brokerage accounts FDIC-insured?
No, brokerage accounts are not FDIC-insured. FDIC insurance only covers deposit accounts at banks, like checking, savings, and CDs. Brokerage accounts, which hold investments like stocks, bonds, and mutual funds, don’t qualify because they’re considered investment products, not bank deposits.
Is SIPC insurance or FDIC insurance better?
FDIC insurance is better for protecting cash in bank accounts, like your business checking or savings. SIPC insurance, on the other hand, protects investments held in brokerage accounts, like stocks, bonds, and mutual funds.
Many businesses benefit from having both types of coverage, depending on how they manage cash and investments.
Should I hold cash in FDIC or SIPC?
If you’re holding cash for your business—think operating expenses, payroll, or reserves—FDIC-insured accounts are the safer bet. FDIC insurance covers up to $250,000 per depositor per bank and kicks in if the bank fails. Your account could be insured for balances exceeding the $250,000 standard amount if your banking platform works with a sweep network.
SIPC offers limited protection for cash, but only if that cash is sitting in a brokerage account, not a regular bank account. And even then, it only applies if the brokerage firm itself fails—not if your investments lose value.
What’s not covered by SIPC?
SIPC doesn’t cover everything, so it’s important to know what’s excluded:
- Losses from market fluctuations (if your investments drop in value, SIPC won’t reimburse you)
- Certain investment products like commodities, futures contracts, currencies, or crypto
- Fraud or theft by investment advisors (unless it involves the failure of a SIPC member brokerage)
- Accounts at non-SIPC member firms
So, while SIPC helps protect your brokerage account if the firm itself fails, it’s not a safety net for bad investments or high-risk assets.
Are mutual funds FDIC-insured?
No, mutual funds are not FDIC-insured. FDIC insurance only covers deposits like checking accounts, savings accounts, CDs, and certain retirement accounts held at FDIC-insured banks.
Mutual funds are investment products—not deposits—and come with market risk. If the market tanks or the mutual fund’s value drops, the FDIC won’t cover those losses.
