How can I privately insure against bank going bankrupt?

External question — Personal Finance Stack Exchange Author: Frames Catherine White Original post: https://money.stackexchange.com/questions/169603 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. In Australia we have the goverment backed FCS The Financial Claims Scheme (FCS) is an Australian Government scheme that provides protection to deposit-holders with Australian incorporated banks, building societies and credit unions (known as authorised deposit-taking institutions or ADIs), and general insurance policyholders and claimants, in the unlikely event that one of these financial institutions fails. The FCS is a government-backed safety net for deposits of up to $250,000 per account holder per ADI. If I would like more cover, could I get it privately? Let's say I sold a house for $5,000,000, and I wanted to say keep that money in my bank account for a few months while I sorted out buying a new one. The risk of the bank going bankrupt in that period is very low, but not zero. So if i wanted to spend some money to shield myself against that risk, what sort of policy would i be looking for? What are the key words to tell an insurance company/broker? Is this even a thing? Manually splitting between banks would rapidly become an adminstrative nightmare. Especially for relatively short-term. $5M would need to be split between 20 banks. And there are less than 100 ADIs, so this would cap out at $25M. So I am wondering instead about insurance taken privately.

External answer — Personal Finance Stack Exchange Author: gnasher729 Original post: https://money.stackexchange.com/a/169605 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. united-kingdom There is a very similar scheme in the UK. There is one big risk: If your bank cannot pay, then another bank or insurance can likely not pay either. You can open savings accounts in enough different banks to reduce the risk, you can't make it go away.

External answer — Personal Finance Stack Exchange Author: mhoran_psprep Original post: https://money.stackexchange.com/a/169606 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. In the United States you can open accounts at different banks/Credit Unions. In The US the amount of coverage can be increased by the use of Joint and Individual accounts. A couple can get 3x the coverage by each having a personal account, and then having a joint account. In Australia this doesn't work the same way . For joint accounts, the amount of FCS protection is determined by splitting the deposit equally between the account holders. Each account holder's share is then added to any other eligible deposits they may hold under their own name at the same bank, building society or credit union before the $250,000 FCS limit is then applied to the total for each individual. Case study Alex and Peter have a number of accounts with their credit union: $300,000 in a joint account $50,000 in a separate account in only Alex’s name. The FCS protects a total amount of deposits up to $250,000 for each account holder for each bank, building society and credit union. Therefore, Peter is covered under the FCS for $150,000 (half the joint account) while Alex is covered for $200,000 (being the sum of $150,000 from the joint account in addition to the $50,000 from his individual account). That would mean that you need to split the funds across different financial institutions. You have to be careful that the financial institutions aren't related : The FCS protects deposits up to $250,000 per account holder at each separate bank, building society or credit union (also known as authorised deposit-taking institutions, or ADIs). So a person can have up to $250,000 in deposit accounts with a number of different ADIs, and they will all be protected by the FCS. It is important to note that some ADIs market themselves under more than one brand or trading name. For example, BankWest is part of the Commonwealth Bank, while St George is part of Westpac. Some banks also offer accounts under the name of a different company, such as a subsidiary of the ADI: for example, deposit accounts offered by RAMS are actually Westpac accounts. Some accounts may also be branded or marketed under the name of a third party, such as Bank of Queensland offering accounts under “Virgin Money Australia” name or National Australia Bank offering accounts under the “Citi” name. So, a depositor might think they have accounts with two different banks, when both accounts are actually with the same institution. More information is available on our Different banking businesses under one banking licence page.

External answer — Personal Finance Stack Exchange Author: paulj Original post: https://money.stackexchange.com/a/169607 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. united-states Many brokerages allow you to sweep funds into FDIC backed account. That account though, is spread over multiple bank deposits. Fidelity's FDIC-Insured Deposit Sweep Program details In utilizing the Program, your uninvested cash balance is swept to a program bank where the deposit is eligible for FDIC insurance. If you have more than $245,000 in uninvested cash in your account, the Program will maximize your eligibility for FDIC insurance by allocating uninvested cash across multiple program banks. Assuming all the banks have available capacity, a customer could have up to $4 million of uninvested cash in their Fidelity Cash Management and IRA accounts covered by FDIC insurance.

External answer — Personal Finance Stack Exchange Author: quarague Original post: https://money.stackexchange.com/a/169611 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. If the money is deposited in Germany, there is a second layer of insurance that protects you. First, there is a government backed deposit insurance similar to the Australian one which is limited to 100,000 Euros. But in the case of a bank going bankrupt, this insurance would only be the second step. Before that kicks in, there is an insurance where the banks insure each other ( here is the website of this insurance scheme, in German). If one bank goes broke, the other banks take over the accounts of their customers including all funds or debt. Technically an individual bank may not be part of the insurance scheme but all major banks are, the link has a list of all members. Only if the other banks are not able to take over the accounts of the bankrupt bank, the limits of the government insurance scheme would apply.

External answer — Personal Finance Stack Exchange Author: DJClayworth Original post: https://money.stackexchange.com/a/169612 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. You are massively over-concerned with the problem of bank failure in Australia. Australia has not had a bank truly fail (as opposed to being taken over) since the 1990's. This is because, as well as the investor guarantees, Australia has a very well-regulated banking system governed by the APRA - unlike the US which has both many more banks and much less control over risky investments. The most recent banks to fail were the State Bank of Victoria (1990), State Bank of South Australia (1991), and the R&I Bank of Western Australia / Bankwest (1992). All of those were rescued by the appropriate state government and investors suffered no losses. So nobody in Australia has suffered a loss from a bank failure in at least thirty years, and probably a lot longer. If you are keeping a large amount of money in a bank for merely a few months the chances of you losing money due to a bank failure are negligible by any measure. You would do much better by focussing your attention and effort on matters which might make you some profit or guard against a significant risk. You can reduce that already negligible risk by putting the money in one of the "Big Four" banks. There is zero chance that the government will let those fail. Or alternatively, if you absolutely have to take some protection in order to have peace of mind, ask your lawyer to keep it. They will have insurance that covers them in case of losses. (Although statistically it's actually far more likely that your lawyer will steal the money than your bank will collapse.)