The Financial Crisis and Your Business

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What protection do I have if my bank runs into financial difficulty?
If your bank fails, under the bailout legislation, the fdic will now cover your assets up to $250,000, a hike from the old $100,000 limit. If you have more cash than the fdic will insure at any one bank, it makes sense to split it up between different institutions. And if your bank merges with another at which you also have an account, the two accounts get separate insurance for six months, giving you time to get things in order.

What about my brokerage?
At securities firms, client holdings are supposed to be segregated from the brokerage firms' assets. But if a brokerage fails and some of your funds have been misappropriated, the Securities Investor Protection Corp. will make sure you get back all your assets—stocks, bonds, and other holdings—and cover any shortfall of up to $500,000.

I use a money-market fund as a sweep account for my checking. Am I covered if the value of my money-market fund falls below $1?
After shares in one money-market fund fell below $1, the Treasury Dept. created a new backstop system for these funds. But the guarantee is limited. Funds aren't automatically enrolled; fund companies pay a fee to participate. The program covers only the balance in your funds as of Sept. 19, or on the day your fund's share price drops below $1, whichever is lower. There isn't any coverage for money-market accounts opened after Sept. 19.

I have a policy with AIG (AIG). Should I be worried?
No. The problems at aig were in the holding company, not in the subsidiaries that write insurance. Those operations are regulated at the state level, have their own capital, and are not at risk of failing.

What happens to my policy if my insurer fails?
Each state has guaranty funds to pay claims if this should happen, but these funds have limits that vary by state. For property and casualty policies, claims are often capped at $300,000. So check with your agent or state insurance department to find out how much would be covered if your insurer goes under, and look at A.M. Best's ratings of insurance companies to get a sense of your insurer's financial health.

What do AIG's woes mean for the rest of us?
While some buyers of insurance steered clear of aig when concerns about the company were at a fever pitch, a spokesman says renewals and new business are back to normal. However, insurance rates are likely to be less favorable going forward for other reasons. Insurers rely heavily on returns generated by their investments, and bond holdings in firms like Lehman Brothers and some commercial banks have taken hits. That will put upward pressure on rates.

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Barrett is a senior correspondent for BusinessWeek SmallBiz.