What SIPC Insurance Covers (and What It Doesn’t)

Quick answer: SIPC insurance protects the cash and securities in your brokerage account if your broker fails and your assets are missing, up to $500,000 per customer, including a $250,000 limit for cash. It does not protect you against falling prices, bad investment advice, or assets that are not securities, such as most crypto, commodity futures and forex.

What SIPC insurance is

The Securities Investor Protection Corporation (SIPC) is a nonprofit created by U.S. law in 1970. Most brokerage firms registered with the SEC must be members. When a member firm fails and customer assets are missing, SIPC steps in to return customers’ securities and cash, either by transferring accounts to another broker or by paying claims in a liquidation.

SIPC is often compared with FDIC insurance at banks, but they work differently. The FDIC insures the value of a deposit. SIPC restores missing assets; it does not guarantee what those assets are worth.

What SIPC covers

Covered by SIPC	Limit
Stocks, bonds, Treasury securities	Up to $500,000 per customer in total
Mutual funds and money market mutual funds	Included in the $500,000
Certificates of deposit held at the broker	Included in the $500,000
Cash held to buy or sell securities	Up to $250,000 (part of the $500,000)

Coverage applies “per customer” in each separate capacity. That is why an individual account, a joint account and an IRA at the same failed broker may each be protected separately. SIPC explains the details on its page about investors with multiple accounts.

What SIPC insurance does not cover

• Market losses. If a stock you own falls in price, SIPC does nothing. In SIPC’s words, it “does not protect against the decline in value of your securities.”
• Bad advice or unsuitable recommendations from a broker.
• Commodity futures (unless held in a special portfolio margining account) and foreign exchange trades.
• Investment contracts not registered with the SEC, such as some limited partnerships, and fixed annuities that are not registered.
• Digital assets that are not securities, and digital asset securities that are unregistered investment contracts, even if held at a SIPC member.
• Cash held in connection with a commodities trade.

How a SIPC case works in practice

Brokerage failures are rare, and in many cases customers never need to file a claim because their accounts are moved to a healthy firm. When that is not possible, a court-appointed trustee liquidates the firm. Customers file claims, and the trustee returns customer property first. SIPC’s fund covers missing assets up to the limits above.

Many large brokers also buy “excess SIPC” insurance from private insurers that can cover amounts above SIPC limits. If that matters to you, read your broker’s disclosures carefully: excess coverage usually has its own aggregate caps and conditions.

How to check that your broker is a SIPC member

• Search the firm on SIPC’s list of members.
• Confirm its registration and any disciplinary history on FINRA BrokerCheck.
• Check the legal name on your statements: apps sometimes use a clearing firm or a separate broker-dealer entity, and that is the entity that must be a member.

All the brokers covered in our guides to the best online brokers and best brokerage accounts for beginners are FINRA and SIPC members, but it is always worth checking for yourself.

SIPC insurance vs. FDIC insurance

	SIPC	FDIC
Where it applies	Brokerage firms that are SIPC members	Banks and savings institutions that are FDIC members
What it protects	Missing cash and securities if the broker fails	Deposits (checking, savings, CDs) if the bank fails
Standard limit	$500,000 per customer, including $250,000 for cash	$250,000 per depositor, per insured bank, per ownership category
Protects against market losses?	No	Not applicable: deposits do not fluctuate in value

Some brokerage accounts sweep uninvested cash into partner banks, where it may be covered by FDIC insurance instead of SIPC. Your broker’s cash sweep disclosure explains which protection applies to your cash.

Example: how coverage can add up across accounts

Imagine one person holds three accounts at the same broker: an individual account, a joint account with a spouse, and a Traditional IRA. Because SIPC generally treats each separate legal capacity as a separate customer, each of those accounts can have its own $500,000 limit (including up to $250,000 of cash). Two individual accounts in the same name, however, are generally combined and share one limit. SIPC’s page on investors with multiple accounts lists the capacities it recognizes.

What to do if your broker fails

• Do not panic-sell: in many cases accounts are transferred to another firm without any action from customers.
• Keep your latest statements and trade confirmations; they are the evidence of what you owned.
• Watch for official notices from the trustee or SIPC, and file a claim by the deadline if one is required.
• Be wary of anyone contacting you to “recover” assets for a fee.

Frequently Asked Questions

Does SIPC insurance cover my IRA separately from my regular brokerage account? Generally yes: accounts held in different legal capacities, such as individual, joint and IRA, are usually treated as separate customers for SIPC purposes. See SIPC’s guidance on multiple accounts for the exact rules.

Does SIPC insurance cover crypto in my brokerage app? Usually not. SIPC says digital assets that are not securities are not protected, and many crypto holdings in apps are held by a separate, non-SIPC entity.

Does SIPC insurance cover robo-advisor accounts? If the assets are held at a SIPC-member broker-dealer, the same rules apply. Check which firm actually holds (custodies) your assets.

Sources and Verification

SIPC limits and exclusions were checked against SIPC’s official pages on October 20, 2026.

• SIPC: What SIPC protects
• SIPC: Investors with multiple accounts
• SIPC: List of members
• FINRA BrokerCheck

This article is for educational purposes only and does not constitute financial, investment, tax or legal advice. CapitalAtlass is not a registered investment advisor. Found an error? Email admin@capitalatlass.com.