What is brokerage account insurance?

Brokerage account insurance is a service provided by brokers to protect client funds from risks associated with brokerage bankruptcy or other unforeseen circumstances.

It minimizes risks for investors by safeguarding their assets in the event of a company's financial problems.

Insurance terms and conditions

1. Minimum amount for insurance:

• The minimum amount on the insurance account to use is 5,000 EUR or equivalent in another currency.
• Most often a part of the capital is insured - up to 83% of the total amount on the account.

2. In case of broker's bankruptcy:

• The insurance policy compensates for part of the losses in case of a broker's bankruptcy or financial difficulties.

Benefits of brokerage account insurance

• Asset protection: Insurance returns a portion of clients' funds in the event of financial problems at the broker.

• Increased confidence: Having an insurance policy increases investors' confidence in the safety of their funds.

• Safe custody: Client funds are protected in case of emergencies.

Compensation Programs

Financial services compensation programs in the US, UK and Europe protect clients' accounts.

They cover up to 83% of the amount in the account in the event of a broker's bankruptcy:

• In Europe and the UK, compensation covers up to 83% of assets.
• In the US, there are also protections in place to guarantee payouts in the event of default.

Types of insurance policies

Silver policy:

• Sum insured: 2,500 EUR
• Payout percentage: 30%

Gold policy:

• Sum insured: 5,000 EUR
• Payout percentage: 50%

Platinum policy:

• Sum insured: 10,000 EUR
• Payout percentage: 83%

Types of brokerage accounts and their advantages

• Reliability: Insurance reduces the risks of asset losses.

• Additional protection: Guarantees minimization of losses in case of broker's default.

• Long-term investments: Allows investors to invest for the long term with confidence, knowing that their assets are protected.

Examples of how to determine the amount of payout based on the sum insured:

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The insurance policy is designed for 1 year with the possibility of extension.