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FDIC Changes

Posted on 18 Feb 09

In today’s financial environment, it is important for an insurance agency to be aware of the FDIC insurance regulations and changes to insurance coverage.

Given InsurBanc’s in-depth knowledge of the cash management needs of the independent insurance agent, we realized there was a need to provide updates to FDIC insurance coverage and to determine the FDIC insurance eligibility of premium trust accounts. InsurBanc understands the unique characteristics of these accounts and therefore researched FDIC interpretations and legal opinions on the matter.

The information is intended to provide guidance on this important topic to help ensure the safety of your deposits.

Important information regarding FDIC insurance and how to determine your coverage, both for your agency and personal accounts, can be found on our website at

Has the FDIC increased deposit insurance limits?_Yes, FDIC insurance limits for Certificates of Deposit, savings accounts and other bank deposits has temporarily increased from $100,000 to $250,000 in effect through December 31, 2009.

In addition, all non-interest bearing transaction deposit accounts at an FDIC insured institution, including personal and business checking accounts that do not earn interest, are fully insured for the entire amount in the deposit account (FDIC’s Liquidity Guarantee Program). This unlimited coverage is temporary and will remain in effect for participating institutions until December 31, 2009. You need to contact your institution to see if they are participating in the Liquidity Guarantee Program. InsurBanc is a participating institution.

How can I determine if my deposits accounts are covered?

You can use the FDIC Calculator to determine your FDIC coverage for each FDIC-insured bank where you have deposit accounts. The calculator lets you know in a printable report whether your deposits are within or exceed coverage limits. You can access the calculator via

Are my premium trust accounts eligible for FDIC insurance coverage?

Yes, premium trust accounts can be eligible for pass-through FDIC insurance. However, the name and ownership interest of each owner in the account must be ascertainable from the deposit account records of the insured bank or the depositor.

To accomplish this, accounts need to be set up as fiduciary accounts. The deposit account record of an insured depository institution must expressly disclose the existence of any fiduciary relationship and be titled as such.

An agency also needs to maintain accurate records indicating the amount of funds owed to each policy holder, carrier or the agency. These records should be kept in good faith and in the regular course of business by the depositor.

As long as these recordkeeping requirements are met, deposit insurance of up to $250,000 would be provided for the funds that the agency owns outright and up to $250,000 for each policyholder or carrier for whom the funds are being held. Agencies should take a careful look at the timing and arrangement made with their carriers for payment of policyholder funds to determine ownership of these funds.

Would the premium funds deposited with the agency be insured separately from the owner’s other accounts?

No. Funds deposited by fiduciary (agency) on behalf of one or more owners (policy holders, carriers, agency) would be added to any other deposits of the owner at the same insured bank and the total would be subject to the insurance limit of that owner.

Who should I contact if I have questions on my premium trust account on FDIC insurance eligibility?

If you have any specific questions pertaining to your agency’s premium trust accounts, you should contact the FDIC direct at 1-877-ASK-FDIC (275-3342). The premium trust account coverage information provided by InsurBanc is based on the FDIC’s deposit insurance regulations and FDIC interpretations of these regulations.