What Does SIPC Insurance Cover?
SIPC is not an investor version of the FDIC, which automatically covers your bank account up to a certain dollar limit. If your broker fails, most (if not all) your securities (stocks, bonds, mutual funds, etc.) will be returned to you. After the broker’s customer assets have been distributed, SIPC steps in to replace only securities and cash that are missing from your account. SIPC covers any missing assets up to a limit of $500,000 per account type, of which $100,000 may be claims for cash. In regard to money-market funds, if your statement lists these assets as shares with a value of $1, such as Schwab’s Value Advantage, they are viewed as mutual funds and qualify for the full $500,000 coverage limit. If the money-market assets are listed only in dollar figures or in a cash account, the limit of coverage is $100,000. Each account that is a separate legal entity is treated on an individual basis. For instance, the following would qualify as separate accounts, each subject to the $500
