FDIC Insurance Coverage On Business Accounts

Answered by:

Question:

I had a customer asking about FDIC insurance coverage on a business account. Is the coverage the same as on a regular personal account, or are there some differences?

Answer:

Unless the account is owned by a sole proprietor, there are significant differences.

Coverage for corporations, partnerships and unincorporated associations is described in Section 330.11 of the FDIC's regulations (12 CFR Part 330). Although the general insurance limit of $100,000 applies, there are real limits on the business's ability to increase coverage by using different forms of ownership.

Businesses are not able to get additional coverage for joint accounts, and holding a number of accounts for different purposes will also be of no avail. In essence, the business only gets "individual account" coverage. The only exception is when the business is holding funds as a fiduciary (such as for an employee benefit plan), in which case "pass through" coverage may be available to cover the individual participants.

First published on BankersOnline.com 06/9/03