CDIC coverage: what it is and how it protects your money

The Canada Deposit Insurance Corporation (CDIC) is a Canadian federal Crown corporation created by the Parliament of Canada back in 1967. The goal of CDIC Canada is to protect Canadians’ money in the rare case of a bank failure. To do this, the CDIC provides insurance on eligible deposits up to $100,000 per eligible account. However, in light of the recent bank failures in the U.S., there have been calls from various organizations, including the Banks and Trust Companies Association (BATCA), for enhanced protection — especially since Americans receive coverage for balances up to $250,000.

Deposit insurance coverage is free and automatic to the consumer. Member institutions pay for this protection in the form of premiums. However, not all accounts are eligible for CDIC insurance and not all banks in Canada are CDIC members.

The CDIC covers eligible deposits up to $100,000 per insured category within member financial institutions. Wealthsimple recently increased that threshold threefold, and is now offering users up to $300,000 of CDIC coverage on its cash accounts.

So, what products include deposit insurance protection? According to the CDIC website, eligible deposits in Canadian or foreign currency, guaranteed investment certificates (GICs), and other term deposits will be covered. This includes:

• Deposits held in one name
• Deposits held in more than one name (i.e. joint accounts)
• Deposits held in an RRSP (registered retirement savings plan)
• Deposits held in an RRIF (registered retirement income fund)
• Deposits held in a TFSA (tax-free savings account)
• Deposits held in an RESP (registered education savings plan)
• Deposits held in RDSPs (registered disability savings plans)
• Deposits held in trust (You can visit the CDIC website for more information on how coverage works for professional trustee accounts.)

As of April 1, 2023, eligible deposits held in an FHSA (first home savings account) will be covered separately up to $100,000.

• Stocks
• Bonds
• Mutual funds
• ETFs (exchange-traded funds)
• Cryptocurrencies

In addition, the CDIC does not cover any deposit losses that are due to theft and/or fraud.

To find out if your bank is a CDIC member institution, you can search the name of your bank + CDIC. Or you can browse the entire list of CDIC member institutions online.

Not all Canadian institutions offer CDIC protection, so this should be something you look for when opening an account with a new bank. That said, more than 80 major banks are members. This includes brick-and-mortar institutions and online banks, such as EQ Bank.

For other digital institutions, the coverage definitions are a little murkier. If you type “Wealthsimple CDIC” into Google, for instance, you’ll find a page that informs you that while Wealthsimple is not an official CDIC member, all deposits held in trust in a Wealthsimple Cash or Save account are eligible for coverage. Deposits held in Wealthsimple Trade, Invest or Crypto accounts are not, however. If you’re a Wealthsimple customer, we encourage you to contact the company to find out more about the eligibility of your deposits.

Some of the most popular CDIC member banks include:

• Bank of Montreal
• TD Canada Trust
• CIBC
• Simplii Financial
• CIBC
• Desjardins Trust
• Manulife Bank of Canada
• National Bank of Canada
• Royal Bank of Canada
• Tangerine Bank

At this time, the CDIC insures only up to $100,00 in eligible deposits per account in the case of an institutional failure. This does not change for joint accounts or accounts held in more than one name.

However, if you have more than one account open with the same bank, each account will be insured for up to $100,000. For example, if you hold a chequing account, savings account, TFSA, and RRSP all with Tangerine Bank, you will have a combined coverage of up to $400,000 ($100,000 per account) on eligible deposits. Those calling on the government to reassess current CDIC coverage argue that if the federal crown corporation can cover multiple accounts with one bank, it should be able to cover a higher deposit held in a single account. The federal government, which is responsible for setting this limit, made note in its 2023 budget that it may consider adjusting the deposit insurance threshold in the event of a market disruption.

For now, the maximum remains at $100,000 per eligible account.

The CDIC covers federally regulated credit unions but provincially regulated credit unions cannot be CDIC members. However, that doesn’t mean that provincially regulated credit unions are unprotected. Each province has its own provincial deposit insurer offering varying levels of coverage. Sometimes they even offer better coverage than what is provided by the CDIC.

Deposit insurance protection for provincial credit unions varies depending on the province the credit union is based in. For example, in Ontario, all credit unions and caisses populaires are covered by the Financial Services Regulatory Authority (FRSA) of Ontario. FSRA covers non-registered deposits, such as those held within your chequing or savings account, up to $250,000 through something called the Deposit Insurance Reserve Fund (DIRF). Any deposits held in an unregistered account, which includes your TFSA or RRSP, have unlimited coverage.

Canadian investors should also be aware of another protective organization called the Canadian Investor Protection Fund, or CIPF. Similar to the CDIC, the CIPF is a non-profit organization meant to protect clients should a CIPF member become insolvent. CIPF members are primarily investment dealers and mutual fund dealers.

The main differences between CDIC and CIPF are as follows.