A business bank account backed by the governments Federal Deposit Insurance Corporation (FDIC) is insured against all bank failures for up to $250,000 per depositor, per insured bank. This is critical for your business to ensure your company assets are protected in the event of a financial institution catastrophe. Amounts in excess of $250,000 can be insured by using separate banks, alternative insurance plans, or banks with additional insurance protection.
One business checking account with additional FDIC insurance is Brex , which partners with 17 affiliate banks to spread your finances across multiple financial institutions. This allows business funds with Brex to be insured for up to $1.75 million. Note that Brex recently tightened qualifications, so visit its website for more information to see if your business qualifies.
How FDIC Insurance for Business Works
FDIC insurance protects funds in your business bank account in the unlikely event of a bank failure, which is the closing of a bank by a federal or state regulatory agency, usually because the bank cannot meet its obligations to depositors. If that happens, the FDIC steps in and ensures depositors get access to insured funds.
The FDIC will cover the balance of each insured account up to the insurance limit, including any principal and accrued interest through the day that the bank closes. The table below includes the insurance information provided by the FDIC website .
|FDIC Insurance Limits|
|Account Ownership Type||FDIC Insurance Amount|
|Single accountsowned by one person||$250,000 per owner|
|Joint accountsowned by two or more people||$250,000 per co-owner|
|Certain retirement accounts, including individual retirement accounts (IRAs)||$250,000 per owner|
|Revocable trust accounts||$250,000 per owner per unique beneficiary|
|Corporation, partnership, and unincorporated association accounts||$250,000 per corporation, partnership, or unincorporated association|
|Irrevocable trust accounts||$250,000 for the noncontingent interest of each unique beneficiary|
|Employee benefit plan accounts||$250,000 for the noncontingent interest of each plan participant|
|Government accounts||$250,000 per official custodian|
What Is Covered With FDIC Insurance for Business
- Business Checking Accounts
- Business negotiable order of withdrawal (NOW) account (interest-earning demand deposit account)
- Business Savings Accounts
- Business money market deposit accounts
- Business time deposits, such as certificates of deposit (CDs)
- Cashiers checks, money orders, and other official items issued by the bank
What Is Not Covered With FDIC Insurance for Business
- Stock investments
- Bond investments
- Mutual funds
- Life insurance policies
- Municipal securities
- Safe deposit boxes or their contents
- United States Treasury bills, bonds, or notes
Pros & Cons of FDIC Insurance for Business
|Guarantees business funds up to $250,000 will be insured in the unlikely event of a bank failure||Most accounts are only insured for up to $250,000, which may be much less than a business has on deposit|
|FDIC insurance is automatic at member banks; you wont have to pay a premium to receive coverage||Low insurance limit for a business might require you to hold business funds at multiple banks|
How To Insure Business Funds in Excess of $250,000
With personal bank accounts, most customers dont have to worry about having funds higher than the FDIC-insured limit of $250,000. However, this is much more common for businesses.
Here are five ways to insure funds that exceed the FDIC limit:
- Choose a provider that sweeps funds into multiple banks: Some financial institutions partner with multiple banks, which allows them to split your funds into those banks. Your funds in each bank would be insured for up to $250,000. Brex distributes your funds among its 17 partner banks to give you insurance of up to $1.75 million.
- Open up accounts at multiple banks : You can split your money into multiple banks, with the funds in each bank insured for up to $250,000.
- Move funds to a credit union: Credit unions have their own federal insurance known as the National Credit Union Share Insurance Fund. Its available through the National Credit Union Administration (NCUA), which insures accounts for up to $250,000.
- Choose an FDIC bank thats also a member of the Depositors Insurance Fund (DIF): The DIF insures funds above the FDIC limit. Its website has a list of banks that are members of both the FDIC and DIF .
- Find other providers of FDIC insurance: There are external companies that provide FDIC insurance in excess of the FDIC limits. One such company is Wintrust, which has a program called MaxSafe . MaxSafe accounts are insured for up to $3.75 million.
You can get detailed information about your specific deposit insurance coverage through the FDICs Electronic Deposit Insurance Estimator , where youll be asked to provide information about your accounts. You can also call the FDIC at (877) ASK-FDIC [(877) 275-3342] for assistance from an FDIC deposit insurance specialist.
How To Know If a Bank Is FDIC-insured
Banks that are FDIC-insured must have the FDIC logo both at the banks physical location and on all marketing materials.
You can also call the FDIC at (877) ASK-FDIC [(877) 275-3342] or use the FDICs BankFind tool to find out if a specific bank is covered by FDIC insurance. Make sure to check if a bank is FDIC-insured before opening a business bank account .
When choosing a business bank , its crucial that you ensure the banks accounts are FDIC-insured and that you understand the limits of FDIC insurance and how to protect funds above $250,000. FDIC insurance will give you peace of mind knowing that your business assets are protected in the event that your business bank fails.
Are LLC accounts FDIC insured
Details of FDIC Coverage
As with consumer accounts, total deposits in eligible business accounts from a corporation, partnership, LLC or unincorporated organization at a bank are covered up to $250,000 .
How much is an account insured for by the FDIC
The standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category . And you don’t have to purchase deposit insurance.
Does FDIC insurance cover multiple accounts same bank
The FDIC adds together all single accounts owned by the same person at the same bank and insures the total up to $250,000.
What accounts does the FDIC not cover
Investment products that are not deposits, such as mutual funds, annuities, life insurance policies and stocks and bonds , are not covered by FDIC deposit insurance.