If your bank were to fail, would all your deposits be covered by the FDIC? Here's what you need to know and do to "insure" your money is safe.

Fortunately, bank failures are rare events nowadays, and when they do occur, the public hardly notices. That's because the FDIC quickly steps in to protect all insured depositors. But if your bank or savings institution were to fail, would all your deposits be covered by FDIC insurance?

For the vast majority of bank customers, the answer is a definite "yes"—their funds are completely protected, either because their deposits at the bank total less than $100,000 or they qualify for additional coverage under the FDIC's rules. But a small minority of customers with more than $100,000 on deposit at one bank may have funds that exceed the federal insurance limit, so they would not be fully protected if their bank failed. Regrettably, among the uninsured

Among the uninsured depositors at recent bank failures were many retired people who mistakenly believed they were fully insured.

depositors at recent bank failures were many retired people who worked hard to accumulate substantial assets and mistakenly believed they were fully covered by the FDIC.

"The FDIC is very concerned about the situation of depositors who did not realize some of their funds were uninsured until their institution failed," says Kathleen Nagle, a supervisor with the agency's Division of Compliance and Consumer Affairs in Washington. That's why the FDIC for years has conducted an extensive deposit insurance education program for consumers and bankers, including publications, telephone assistance, and an interactive Web site that helps calculate a person's insurance coverage. The FDIC also periodically attempts to simplify the insurance rules, to the extent possible under the law. Despite these efforts, however, some depositors still don't get the information they need to know whether their deposits are fully covered by FDIC insurance.

If you or your family has more than $100,000 at a single bank or savings association, you should take the time to understand the basics about the insurance rules and your coverage, because you could be at risk of losing some of your funds if the institution fails. But even if you have less than $100,000 on deposit at any one institution, you may want to become familiar with the basics of FDIC insurance and how to protect yourself. Why? "At some time in their lives, most consumers will have more than $100,000 on deposit, even if just for a short period of time, such as after they've sold a house or received the proceeds of an inheritance," Nagle explains. "It's important to know about the rules for insurance coverage before your bank deposits go over the $100,000 threshold."

We try to include interesting, useful information about deposit insurance in each issue of our quarterly FDIC Consumer News. For the first time, however, we are devoting an entire issue of our newsletter to helping bank customers protect their hard-earned savings. To learn more about FDIC insurance and resources for consumers keep reading...