Securities in Schwab accounts — including fully paid securities for stocks and bonds and excess margin securities—are segregated in compliance with the U.S. Securities and Exchange Commission's Customer Protection Rule. This is the legal requirement for all U.S. broker-dealers. Segregated assets are not available to general creditors and are protected against creditors' claims in the unlikely event that a broker-dealer becomes insolvent.
As a member of the Securities Investor Protection Corporation (SIPC), securities of custody customers of Schwab are covered up to US$500,000 (including US$250,000 for claims for cash). Besides the SIPC protection, Schwab provides additional brokerage insurance through an agreement with Lloyd's of London and other London insurers.
The combined total of SIPC coverage and its "excess SIPC" coverage means Schwab provides protection up to an aggregate of US$600 million, limited to a combined return of US$150 million per customer, up to US$1.15 million of which may be in cash. This protection becomes available in the event SIPC limits are exhausted.