Cover me!

When I started writing about how people could protect their savings in Canada, the maximum deposit insurance was $60,000. That’s it. Peanuts. Even 43 years ago. When the average Toronto house cost $101,000.

In 2005 the feds upped CDIC coverage to a whopping $100,000. The average house then cost $338,000.

In 2008, as the credit crisis embroiled the world, forcing Wall Street banks to topple and crushing real estate values in America, Washington upped its coverage of individual deposits to $250,000. Canada did not. And today we’re still at $100,000 – when the average Toronto house is $1 million.

But wait. Here comes Carney. And buried in last week’s drab federal budget was a commitment to (finally) jump the insurance people have on their savings to a max of $250,000. (You can certainly exceed that – keep on reading.)

So for the first time in two decades, we’ll match the US level of protection against a bank or federally-regulated financial outfit from going paws-up. Of course, the Yanks need it more than we. In the past five years 15 American banks have failed – six just this year. And how many have bitten the dust in Canada? Right. Zero.

Still, people worry. Over the last twenty years they have moved money between accounts and among banks to maximize insurance coverage they never needed (and never will). Besides, if one of the Big Boys, like RBC or the penguin bank went bust, it’s hard to imagine there being enough cash in Ottawa to make everyone whole. CDIC certainly doesn’t have it.

By the way, CDIC has about $10.9 billion in its jeans. The Royal Bank alone has $1.2 trillion in insurable deposits. So, yeah, we’d have a problem. But, of course, it’s not happening. Ever. Relax.

Okay, what are the feds doing now?

The budget proposes to increase the max with legislation slated for 2027. The standard insurance limit for people will be a quarter-million, per institution, covering savings and chequing accounts, GICs, term deposits and stuff like money orders and travellers cheques (does anyone still use those?).

Significantly, it looks like there will be unlimited deposit insurance protection available for RRSPs and TFSAs. This is aimed at wrinklies who have oodles of cash, brain-dead GICs and other non-performing but safe assets inside their registered accounts.

In addition, the government says there will be temporary “high-balance” coverage available to everyone to handle “life events”. Like when you sell the average slummy house in Vancouver and have $2 million flowing into your chequing account. While that money is transitioned elsewhere it will be covered.

Finally, to avoid having deposit limits fall short of financial reality in the future, CDIC will have to review and modify its coverage every decade.

Big changes. Overdue. And welcomed. Good job, Marky

But having said that, $250,000 is not the true limit. So all of you with several million please keep reading. The rest can walk the dog.

Coverage is per institution and per account, not per individual or household. So you can obtain $250,000 coverage on your savings account, plus an equal amount on qualified assets in an RRSP, a TFSA, a FHSA, a RESP or RRIF. Your spouse, too. Then the two of you can have more coverage on a joint account. And you can secure additional coverage by having GICs also put into the name of a bank subsidiary, like its mortgage corporation.

Wait. There’s more. You can then walk across the street to BeeMo or Scotia or TD and do the same there. More coverage. In fact, it will be relatively simple to secure many millions in CDIC insurance protection.

Of course, you have to own it to insure it. So this only really safeguards the cash and near-cash assets of the wealthiest individuals. Plus CDIC does not cover marketable securities, like ETFs, stocks, mutual funds or tradable fixed-income securities like bonds. And remember this is federal insurance for federally-regulated institutions. So the local First Polish Alliance Auxiliary Fireman’s Benevolent Credit Union ain’t covered. The province may do that.

Finally, let’s say it again: this is insurance you do not need. Banks are not going down. But it costs nothing. If you really want to have a heaping pile of cash and low-T guaranteed certificates, then why not?

Just don’t sleep better at night.

About the (yet another) Ziggy picture: “More Ziggy (who, by the way, was referred to in her last centrefold on October 13 as both “boy” and “her” [not my typo] – she is neither gender fluid or trans .  She is all girl),” writes Lloyd in BC. “This one is in our (pimped) ‘86 VW Westy – which I refer to as “the unofficial official vehicle of Vancouver Island”.  I’ve owned it for almost 40 years and could sell it for almost twice its purchase price. How’s that for investing? Continuing gratitude for all you and your cohorts provide on this blog.“

To save us from more Ziggy shots, please send a picture of your beast to ‘[email protected]’.

Source: https://www.greaterfool.ca/2026/11/10/cover-me/