SIPC does cover multiple accounts, but with a caveat—the accounts must be of a different “type” to be covered up to the set limits. These coverage limits are based on a principle called “separate capacity,” which refers to accounts held in different capacities. Categories of separate capacity include individual, joint, IRA, and corporation, among others.
For example, an investor who holds $500,000 in her individual name, $500,000 in a joint account with her spouse, and $500,000 in her IRA will be fully covered in all three accounts because they are in separate capacities. Accounts of the same type, however, are combined to meet the limits. If our example investor opens another account with $500,000 in her individual name, the assets won’t be covered under SIPC insurance because the total amount in her individual name will be $1,000,000, which is more than the $500,000 limit.
For accounts worth more than the SIPC limits, excess SIPC insurance, which we describe in the article above, can provide additional protection.