What Are the SIPC Coverage Limits?
Knowing that SIPC exists is one thing. Understanding that its protection has a ceiling, and a second, lower ceiling tucked inside that one specifically for cash, changes how people think about where they keep large brokerage balances.
The short answer
SIPC coverage applies per customer at a failed brokerage firm, up to an overall limit, and within that overall limit there’s a smaller sub-limit that applies specifically to uninvested cash sitting in the account. Both limits are set by law and are periodically reviewed, so rather than quoting a specific dollar figure that can change, the more durable takeaway is that the structure has two tiers: a broad limit for total assets and a narrower one carved out just for cash.
Why cash gets its own, smaller limit
The reasoning behind splitting cash into its own sub-limit is that SIPC’s core purpose is restoring securities — the actual stocks, bonds, and funds a customer held — rather than functioning as a cash-holding guarantee similar to a bank account. Because of that focus, uninvested cash in a brokerage account is covered, but only up to its own cap, which is lower than the overall limit covering combined securities and cash together. This is one of the more commonly misunderstood details about the program.
How the limit applies “per customer”
SIPC’s protection generally applies per customer, per brokerage firm, not per individual account someone holds at that firm. Someone with multiple accounts of the same ownership type at the same failed firm may find those accounts combined for purposes of the limit, while accounts held in clearly different capacities, such as an individual account versus a jointly owned one, can sometimes be treated separately. The exact combination rules are technical, which is part of why people with large balances across multiple accounts at one firm sometimes look into how the categorization actually works rather than assuming more accounts automatically means more coverage.
What this means in practice
- Diversifying across firms matters more than diversifying accounts within one firm. Because the limit is tied to the firm, not the number of accounts, holding large balances across multiple brokerages can matter more than splitting one balance into several accounts at a single firm.
- Cash sitting idle carries a different exposure than invested cash. A large uninvested cash balance is subject to the lower cash sub-limit, which is a detail sometimes overlooked by someone parking money temporarily before investing it.
- Account type can affect how balances are grouped. An individual brokerage account and a separate joint brokerage account at the same firm are often treated as distinct ownership categories for purposes of the limit, rather than being combined together.
- The limits are not investment-loss protection. As covered in more detail under what SIPC insurance does not cover, none of this addresses ordinary market losses — it only addresses what happens if the brokerage itself fails.
A practical habit
Because the specific figures are set through legislation and have changed over time, it’s worth checking SIPC’s own published limits directly when the actual numbers matter, rather than relying on a fixed figure that may be out of date. The structural point — an overall limit with a smaller cash sub-limit inside it — tends to hold steady even as the exact numbers are periodically revisited.