FDIC Insurance: Are Your Accounts Fully Covered?

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When a client walks into a bank he or she is bombarded with signs indicating that the funds deposited in the bank are insured by the FDIC. Even if the client does not fully comprehend what that means, the signs offer the client peace of mind to know that his or her funds are safe while on deposit at the bank. However, the signs also give notice to the client that there is a limitation on the FDIC insurance to a specified dollar amount.

When a client comes into an attorney’s office there are no such signs. A client who entrusts funds to an attorney to be placed in escrow, commonly known as an IOLTA account, believes those funds to be safe based merely on the fact that they are placed with the attorney. Like the client’s personal account at the bank, the funds placed with the attorney are also insured by the FDIC; however, FDIC insurance coverage may be limited by considerations that are not apparent to the attorney or the client.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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