Reader Question: What ISN'T Covered By the FDIC?

As always, I welcome reader questions. The following is a great question from a reader still concerned about bank failures. They are still happening, though at a slower pace than we saw immediately following the global financial crises. Here's the question:

I know the FDIC has raised some of its coverage limits, and that is comforting. But are there some things that FDIC insurance doesn't cover if my bank fails?

Yes, the FDIC has raised coverage limits on individual accounts to $250,000, to return to $100,000 on January 1, 2014 (you should begin long-term planning for this now). And, you might be covered for a percentage of some of your assets beyond that $250,000 in some cases. But it is important to note that FDIC coverage does not cover the following:

• Investment products (annuities, mutual funds, bonds, stocks etc.) -- with the exception of some retirement accounts.
  
• Life insurance.
• Money lost due to robbery or theft. Check that your bank has a "blanket bond" to cover losses due to theft and robbery.
• Safe deposit box items. You should find out if your safe deposit box is covered under your homeowner's or renter's insurance. If it's not, and your safe deposit box has something very valuable, see what you can do about getting it covered.

Remember that, for the most part, the FDIC only covers deposit accounts (this includes CDs) in the event of a bank failure. And only up to a certain amount. So spread out your deposits among accounts and banks so that all of your cash is covered.