How Deposits in Canadian Banks are Insured
Understand How Your Money is Protected if Your Bank Fails
Nov 16, 2008
This article reviews the guarantees and insurance available for individual Canadians through the Canada Deposit Insurance Corporation.
What is the CDIC?
The Canada Deposit Insurance Corporation (or CDIC) is a federal Crown corporation, created in 1967. CDIC provides insurance for individual Canadians’ deposits held in its member institutions.
Member institutions include most major Canadian banks, loan companies and trust companies, as well as associations governed by the Cooperative Credit Association Act. CDIC does not receive federal funding, but is funded by premiums paid by member institutions.
A complete list of CDIC member institutions is available at www.cdic.ca.
How Much Insurance is Available for Individual Investors?
When you put money in an eligible deposit in a CDIC member institution, you are automatically insured to a maximum basic insurance level of $100,000, including principal and interest.
What this means, specifically, is that if a bank or member institution fails, Canadian investors with eligible deposits in that institution can receive up to $100,000 of the value of their individual deposits.
Since its creation in 1967, CDIC has stepped in at the failure of 43 member institutions. More than 2 million people holding a total of $26 billion in insured deposits at these failed institutions have received protection of their savings through CDIC insurance coverage.
What Deposits are Insured by CDIC?
Eligible deposits include:
- Savings accounts and chequing accounts
- GICs and other term deposits which mature in 5 years or less
- Money orders, certified cheques, travellers’ cheques and bank drafts
- Accounts that hold realty taxes on mortgaged properties
What Deposits are Not Covered by CDIC?
Some deposits are not insured by the CDIC. These include deposits in credit unions and caisse populaires, Canadian branches of foreign banks, and some Canadian chartered banks. Credit unions and caisse populaires are members of provincial deposit insurance organizations, while the CDIC operates at the federal level.
Accounts and products not insured by CDIC include:
- Any deposits in foreign currency (such as bank accounts in US dollars)
- Mutual funds and stocks
- GICs and other term deposits which mature in more than 5 years
- Bonds
- Treasury bills
- Accounts held in US dollars or any other foreign currency
- Accounts or products that are held in banks or other financial institutions that are not members of the CDIC
What Happens When an Institution Fails?
As soon as possible after the failure of a member institution, CDIC sets up a toll-free number so depositors can call for information. CDIC also sends out letters to depositors, explaining how they will be reimbursed.
Depositors usually receive their money within two months, either by cheque or as a direct deposit in a new account set up at another member institution. If a depositor has an urgent need for funds before the insurance pays out, he or she is able to request an advance payment before the claim is processed.
