In an era when bank mergers are common, customers of merging institutions are asking, “What happens to the $100,000 deposit insurance coverage?” Suppose you are fortunate enough to have two bank accounts at separate banks, and when combined, those two accounts exceed $100,000. Then you learn that the two banks are going to merge. What happens to your deposit insurance coverage?

You will be relieved to know that in general, accounts at the two institutions before the merger would continue to be separately insured for six months after the merger. That time period is even longer with some certificates of deposit.

This grace period helps in two ways. First, it limits potential losses if the new bank fails, and second, it gives you extra time to become fully insured. If necessary, the accounts at the merged institution can be restructured or excess funds moved to another bank. You should, however, check with the newly merged bank to make sure that your funds are covered by the FDIC.