Pass-through FDIC insurance

A US arrangement that extends federal deposit insurance to each individual owner whose money sits in a pooled account, rather than treating the whole account as one insured deposit.

It matters to short-term rental and property managers because owner funds are usually held together in one trust or custodial account. Without pass-through treatment, that pooled balance is insured once. With it, each beneficial owner is insured separately up to the standard limit, which is the difference between meaningful protection and almost none on a large balance.

The protection is conditional, and the conditions are the part to read. The account has to be titled to show it is held for others, and the records identifying each owner and their share have to be accurate and current. Those records are normally the manager's responsibility, not the bank's.

So the insurance is only as reliable as the ledger behind it. When a vendor offers pass-through cover as a feature, the question to ask is who maintains the beneficial ownership records the cover depends on.

This is a US concept. Managers elsewhere are covered by their own national deposit guarantee and client account rules, which work differently.