Account Ownership Categories
Corporation, Partnership and Unincorporated Association Accounts
(12 C.F.R. § 330.11)
Definition
This ownership category includes all deposit accounts owned by a corporation, partnership or unincorporated association.
- A corporation is defined as an organization that is incorporated under the laws of the state in which it is located. This definition includes both for-profit and not-for-profit corporations, as well as "Subchapter S," "Limited Liability (LLC)" and professional corporations (PC).
- A partnership is defined as an association of two or more persons or entities formed to carry on, as co-owners, an unincorporated business for profit.
- An unincorporated association is defined as an association of two or more persons formed for some religious, educational, charitable, social or other non-commercial purpose.
Important!
Accounts of a sole proprietorship are not covered under this account category. Sole proprietorship accounts are insured as the single accounts of the owner.
Insurance Limit
The deposit accounts of a corporation, partnership or unincorporated association are insured up to $100,000 provided the corporation, partnership or unincorporated association is engaged in an "independent activity."
The term independent activity means that the entity is operated primarily for some purpose other than to increase deposit insurance coverage. If a corporation, partnership or unincorporated association is not engaged in an independent activity, for insurance purposes the FDIC will consider its deposits to be owned by the person or persons who established the account.
Corporations and partnerships must be valid under state law to receive insurance coverage that is separate from any insurance coverage that the owners, officers or partners of the business might otherwise receive.
Deposits held in the name of a corporation, partnership or unincorporated association are insured separately from the personal deposits of the owner(s) or officials of the organization.
Example #29:
The president of a corporation has a personal joint account with her husband at the same bank where the corporation's funds are deposited. The president is an authorized signatory on the corporate account. The joint account with her husband is insured up to $200,000 and the corporation's deposits are separately insured up to $100,000.
Corporations
Separately incorporated subsidiaries engaged in an independent activity are separately insured from each other and from the parent company. If a corporation has divisions that are not separately incorporated, funds deposited by those divisions are not separately insured. Additionally, deposit accounts designated for different purposes but held by the same corporation also are not separately insured.
Important!
Insurance coverage for deposits held by a corporation is a maximum of $100,000. The number of signatories on the account or the number of officers does not affect insurance coverage. In addition, if a corporation has multiple accounts at the same bank in the names of different divisions or offices of the corporation, the accounts would be aggregated and insured as the funds of the corporation, up to a total of $100,000.
Example #30:
A corporation has deposit accounts in the same bank for both its Operations Division as well as for its Research and Development Division. Although the accounts have different titles, the deposits of the two divisions will be added together and the total insured up to $100,000 since the deposits are owned by the same corporation.
Example #31:
A private school that is a 501(c)(3) non-profit corporation that has an operating account and a building fund account at the same bank. While the accounts are designated for different purposes, they are not separately insured because all the deposits are owned by the same corporation. Therefore, all of the deposit accounts for the non-profit corporation are combined and insured up to $100,000.
Partnerships
Deposit accounts held in the name of a partnership engaged in independent activity are insured as the partnership's funds, separately from the personal deposits of the partners.
Important!
Insurance coverage for a partnership's deposit accounts at one bank is a maximum of $100,000, regardless of the number of partners that the partnership may have. The number of partners does not affect the amount of insurance coverage.
Example #32:
A financial services partnership is established by five financial planners. All of the partners have equal access to the partnership's bank account, and all have signed the signature card at the bank. The maximum insurance coverage of the partnership's deposits is $100,000. The partnership's deposits are not insured as the partners' single or joint account deposits since the funds are owned by the partnership, not the partners.
Unincorporated Associations
Deposit accounts held in the name of an unincorporated association engaged in an independent activity are insured as the association's funds, separately from the personal deposits of the members.
Important!
Insurance coverage for deposits held by an unincorporated association is a maximum of $100,000. The number of signatories on the account or the number of members that the association may have does not affect the amount of insurance coverage.
Example #33:
A homeowners association, which has 150 members, maintains two different deposit accounts at the same bank: a checking account for its operating expenses and a reserve account for improvements to the common areas. Both of these accounts are added together and insured as the deposits of the homeowners association, up to $100,000. It does not matter for deposit insurance purposes that the accounts are designated for different purposes or the association has 150 members.
Accounts Held by a Fiduciary
Deposit accounts held by an agent or other fiduciary for a corporation, partnership or unincorporated association are insured as the funds of the corporation, partnership or unincorporated association if the requirements for fiduciary accounts are met. The deposits will be added to any other funds the corporation, partnership or unincorporated association may hold at the same bank and insured to $100,000.
Example #34:
A mortgage company maintains its operating accounts at the same bank as a local mortgage servicer. The mortgage servicer accepts loan payments for a number of mortgage lenders, including the mortgage company. The principal and interest portion of the loan payments that the local mortgage servicer accepts on behalf of the mortgage company will be added together with the mortgage company's operating funds and insured up to $100,000.
Example #35:
A professional corporation owned by a group of lawyers maintains its attorney trust account (also known as an Interest on Lawyer Trust Account or IOLTA) at the same bank where one of the firm's clients, a local health club, also maintains an account. The deposits that the attorneys are holding in the IOLTA account on behalf of the health club will be added to the accounts the health club has placed directly at the bank, and insured up to $100,000. Deposits held in a fiduciary capacity are insured as the deposits of the client for whom the fiduciary is acting.
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