What are the SIPC coverage limits for customers?

The SIPC, or Securities Investor Protection Corporation, provides coverage to protect customers against the loss of cash and securities in the event a brokerage firm fails. The correct coverage limits are $500,000 for each customer, which includes up to $250,000 specifically for cash balances. This framework ensures that while customers can recover a significant amount of their assets, protections are also in place to limit the risk associated with cash holdings in brokerage accounts. This dual limit is designed to address both the securities and cash components of customer assets. Understanding these limits is critical for investors, as it helps them make informed decisions about their investments and the safety of their assets in brokerage accounts.