The Ultimate Guide to CDIC Coverage in Canada

No one is immune to the possibility of a bank or credit union failure, no matter how unlikely it may seem. That’s where Canada Deposit Insurance Corporation (CDIC) comes in because the risk of a bank run is low but never zero. Force majeure or not, the CDIC protects your money by providing deposit insurance on eligible deposits held at member institutions. This coverage is completely free and automatic, so no application is necessary.

But what qualifies as an eligible deposit, and how much coverage do Canadians have? Here’s everything you need to know about CDIC coverage in Canada.

What is CDIC coverage, and why do I need it?

The CDIC is a federal Crown corporation that protects Canadians’ deposits in the event of a member institution failure. It was established in 1967 and currently insures over $800 billion in deposits at more than 80 member institutions, like banks and credit unions.

Since 1967, the CDIC has resolved 43 failures and helped more than 2 million depositors keep their hard-earned money. The CDIC board consists of 5 public and 5 private business sector directors, and it is funded through premiums paid by its member institutions.

What’s protected and how much?

CDIC coverage protects eligible deposits held at member institutions up to a maximum of $100,000 per category. This includes chequing and savings accounts, and even deposits held in different names, like joint accounts, or held in registered plans like RRSPs, RRIFs, TFSAs, RESPs, RDSPs, and deposits held in trusts.

Pay attention that the CDIC coverage applies to only those accounts opened at member banks. Brokerages, where you may hold the above-mentioned accounts, are not CDIC members, and therefore those deposits are not eligible for CDIC coverage.

It is important to note that chequing and savings accounts belong to the same coverage category, deposits held in one name, so any deposits held in both accounts at a single financial institution are added together and insured up to a combined total of $100,000.

What are the CDIC categories?

Currently, there are 8 categories for CDIC coverage, each with its own maximum limit. These categories are:

• Deposits held in one name
• Deposits held in more than one name (joint deposits)
• Deposits held in a registered retirement plan (RRSP, RDSP)
• Deposits held in a registered retirement income fund (RRIF)
• Deposits held in a tax-free savings account (TFSA)
• Deposits held in a registered education savings plan (RESP)
• Deposits held in a registered disability savings plan (RDSP)
• Deposits held in trust

Make sure to check the CDIC website for updates on coverage categories and limits.

Which institutions are CDIC members?

CDIC membership is mandatory for all major banks and other federally regulated trust and loan companies, but not all financial institutions qualify.

For example, insurance companies, money service businesses (wire transfer services like Western Union), and foreign-owned banks do not fall under CDIC’s purview. You can check the full list of CDIC member institutions on their website.

All major Canadian banks and some credit unions are CDIC members, including BMO, CIBC, RBC, TD, Scotiabank, and National Bank. Federally regulated credit unions like Coast Capital Savings in BC and UNI coopération financière (UNI Financial Co-operation) in NB. However, it is important to check with your financial institution to confirm their CDIC membership status before opening an account with them.

How do I maximize my CDIC coverage?

The key to maximizing your CDIC coverage is understanding the $100,000 limit per category rule. If you have deposits in different categories, such as deposits held in one name and deposits held in more than one name, you can expect separate coverage of up to $100,000 for each category.

It’s important to note that CDIC coverage applies to each individual, not per household. So if you have multiple individuals in one household with deposits at the same financial institution, they can each receive up to $100,000 in coverage.

You can also spread your deposits across different CDIC member institutions to maximize coverage. This means that you can have up to $100,000 per category in eligible deposits at each institution.

That means you can maximize your coverage by spreading your deposits out at different member banks and credit unions, and across different categories. CDIC also covers foreign currency deposits, but the maximum coverage limit is calculated based on the Canadian dollar equivalent at the time of a member institution’s failure.

What happens if my financial institution fails and it is not CDIC insured?

Unfortunately, in the event that your financial institution fails and it is not a CDIC member, you will not be covered for any of your deposits unless that institution is covered under a different deposit insurance provider. Some provinces have their own deposit insurance programs. So let’s take a look at the different financial institutions and coverage options available.

Credit Unions

Most credit Unions, except for two federal credit unions, have their own deposit insurance through provincial deposit insurers. You can find the full list of provincial credit union deposit insurers on the CDIC website.

Crown Corporations, like ATB

Funds held in Crown corporations, such as the Alberta Treasury Branch (ATB Financial), are guaranteed by the provincial government. This means that deposits in ATB are protected even though it is not a CDIC member.

The government of Alberta provides 100% coverage in the unlikely event that ATB becomes insolvent. Only residents of Alberta can open accounts with ATB. However, non-residents can purchase ATB Financial products.

Non-regulated entities

Foreign banks, such as AMEX Bank of Canada, and money service businesses, such as PayPal, do not fall under CDIC coverage. If these entities fail, you may not be able to recover your deposits.

Comparative table of deposit coverages available in Canada

Canadian Banks	CDIC coverage – up to $100,000 per category per financial institution
Credit Unions (federal)	CDIC coverage – up to $100,000 per category per financial institution
Credit Unions (provincial)	Provincial insurers – from $100,000 to 100% coverage depending on the province
Crown Corporations (ATB)	Alberta’s provincial government provides 100% coverage for all deposits held in ATB
Non-regulated entities	No coverage provided

The provincial insurers’ coverage for deposits held in credit unions

The coverage provided for provincial credit unions varies, so it’s important to check with the specific credit union and its insurer for details. In certain provinces, coverage may only be up to $100,000 per credit union, and in others, it could be up to 100%.

Province	Coverage
British-Columbia	Insurer: Credit Union Deposit Insurance Corporation of B.C.  100% Deposit Coverage Non-deposit investments are not covered.
Alberta	Insurer: Alberta Credit Union Deposit Guarantee Corporation 100% Deposit Coverage Non-deposit investments are not covered.
Saskatchewan	Insurer: Saskatchewan Credit Union Deposit Guarantee Corporation 100% Deposit Coverage Non-deposit investments are not covered.
Manitoba	Insurer: Deposit Guarantee Corporation of Manitoba 100% Deposit Coverage Non-deposit investments are not covered.
Ontario	Insurer: Financial Services Regulatory Authority of Ontario Chequing or savings accounts, up to $250,000. Unlimited coverage for deposits in registered accounts such as RRSPs or TFSAs.
Quebec	Insurer: Autorité des marchés financiers Up to $100,000 coverage deposit insurance per category with the same credit union. GICs are covered. Treasury bills, cryptocurrency, mutual funds, shares, bonds, debentures, and mortgage-backed securities are not covered.
Prince Edward Island	Insurer: Credit Union Deposit Insurance Corporation (PEI) Up to $125,000 coverage deposit insurance with the same credit union. Unlimited coverage for deposits in registered accounts such as RRSPs or TFSAs.
Nova Scotia	Insurer: Nova Scotia Credit Union Deposit Insurance Corporation Up to $250,000 coverage deposit insurance and $250,000 insurance for each TFSA, RRSP, RRIF, or RESP account.
New Brunswick	Insurer: New Brunswick Credit Union Deposit Insurance Corporation Up to $250,000 coverage deposit insurance and $250,000 insurance for each TFSA, RRSP, RRIF, or RESP account.
Newfoundland and Labrador	Insurer: Newfoundland and Labrador Credit Union Deposit Guarantee Corporation Up to $250,000 coverage deposit insurance and $250,000 insurance for each TFSA, RRSP, RRIF, or RESP account.

Business bank accounts and CDIC coverage

CDIC coverage extends to business bank accounts as well, with a maximum of $100,000 in coverage per category. This includes deposits held in the name of a partnership and corporation.

Sole proprietorships are insured under the same category as personal deposits, so any business accounts held in a sole proprietorship should be added together with personal deposits for coverage purposes.

How to invest and protect your money?

While CDIC coverage offers some peace of mind, it’s always important to consider the stability and financial health of a financial institution before opening an account or investing with them.

Financial health ratings

There are many resources available to help assess the financial health of a bank, such as ratings from credit rating agencies like Moody’s and Standard & Poor.

Diversification

It’s also important to diversify your investments across different financial institutions and asset classes to spread out risk. Ultimately, it’s always better to be proactive in protecting your money rather than relying on deposit insurance as a safety net.

Canadian Investor Protection Fund (CIPF)

Certain brokerages in Canada, such as Questrade, also offer deposit insurance through the Canadian Investor Protection Fund (CIPF) for eligible investments up to $10 million. This separate coverage applies in the event that a member firm becomes insolvent and is unable to return client property, including cash held in accounts at the firm. It’s important to note that CIPF coverage does not apply to deposits held in traditional bank accounts, only to eligible investments like stocks and mutual funds held through an investment firm.

Wealthsimple, a Canadian robo-advisor, has CDIC coverage for Wealthsimple Save accounts up to $100,000, provided by Equitable Bank, and CIPF coverage for eligible investments up to $1 million. It’s always a good idea to check with your financial institution or investment firm about deposit insurance coverage before making any decisions.

CIPF vs. CDIC

Unlike the CDIC, the CIPF  is not backed by the government. It is a non-profit organization funded through member firms. As a result, in the event of a systemic collapse of the financial systems that would cause many brokerages to go under at the same time, the funds held by the CIPF to cover deposits might not be enough to cover all depositors. 

How can I get my money back with CDIC coverage?

In the event that a CDIC member institution fails, CDIC will step in to protect depositors and work towards a resolution. You will receive your money via cheque, and there is typically no need for depositors to take any action.

It’s important to note that CDIC coverage applies only to deposits held at the time of failure, so it’s important to regularly check your accounts and make sure they are within the coverage limits.

What is not covered by CDIC protection?

CDIC does not cover mutual funds, stocks, bonds, and other investments. So make sure to diversify your investments and consider other forms of insurance, such as CIPF coverage for eligible investments.

Keep in mind that CDIC coverage is there as a last resort, and it’s always important to research and thoroughly understand the risks of any financial product before investing.