Is robinhood backed up by an insurance company
"robinhood is a member of finra, just like any other broker.  as such, they can't legally ""lose"" your assets. even if they file bankruptcy, you will get your money back. obviously, any broker can steal your assets, but i doubt robinhood is any more likely to steal from you, even if you are rich. here is a quote from an article on thestreet.com: So, despite the name, the Robinhood philosophy isn't about stealing   from rich, but rather taking perks often reserved for top-tier   investors and giving them to the everyman trader"
"I like Muro questions! No, I don't think they do.  Because for me, as a personal finance investor type just trying to save for retirement, they mean nothing. If I cannot tell what the basic business model of a company is, and how that business model is profitable and makes money, then that is a ""no buy"" for me.  If I do understand it, they I can do some more looking into the stock and company and see if I want to purchase. I buy index funds that are indexes of industries and companies I can understand.  I let a fund manager worry about the details, but I get myself in the right ballpark and I use a simple logic test to get there, not the word of a rating agency. If belong in the system as a whole, I could not really say.  I could not possibly do the level of accounting research and other investigation that rating agencies do, so even if the business model is sound I might lose an investment because the company is not an ethical one.  Again, that is the job of my fund manager to determine.  Furthermore and I mitigate that risk by buying indexes instead of individual stock." "I can't imagine how a company that has all the proof it needs of its existence and business dealings is able to be challenged in this way. Fact is, they were doing business first. The insurance company has no claim to make. (I'm not a lawyer, my observation there is based on what's right and logical...perhaps the law disagrees and if so, that law is as crooked as the judge who thinks the request for the insurance company's business dealings off ""frivolous"").  They may have messed up. That's because the evidence looks pretty ""open and shut"".   Too bad for them they're getting pushed around on the basis of ""I'm bigger"" I guess, huh? I don't see why this means they're on their own.  Edit: I didn't see the part about the dillusion suit. Definitely brought it on themselves, still being harassed; and insurance company has no right to shut them or their site down." A protection similar to FDIC for banks is provided to brokerage accounts' owners by SIPC. Neither FDIC nor SIPC provide protection or insurance against identity thefts or frauds, only bank/brokerage failures. Your investment losses are obviously not insured either. For fraud liability check your bank/brokerage policies, you can get insurance for identity theft from your insurance provider (its an optional coverage with many home-owner/renter insurance policies). "A credit default swap is like insurance on a bond, but it isn't. The cash flows just move similarly. They didn't buy insurance on anything. They just bought a contract.   A put ""is like"" downside insurance on a stock. But of course you can still buy them. Investing in TIPS ""is like"" buying inflation insurance, but it isn't." The issue is the time frame. With a one year investment horizon the only way for a fund manager to be confident that they are not going to lose their shirt is to invest your money in ultra conservative low volatility investments. Otherwise a year like 2008 in the US stock market would break them. Note if you are willing to expand your payback time period to multiple years then you are essentially looking at an annuity and it's market loss rider. Of course those contacts are always structured such that the insurance company is extremely confident that they will be able to make more in the market than they are promising to pay back (multiple decade time horizons). Short answer is yes, all the firms are required to keep enough resources on hand to pay claims that may arise from even extreme events like the recent hurricanes.  Insurance firms are rated based on their claims-paying ability and it is absolutely critical for them to maintain enough cushion to pay claims.  If insureds lose confidence, they won't be able to write any more business, and they are done.  In addition, to manage tail risks, primary insurers like Allstate will often purchase reinsurance.  So, for example, Allstate might go to Swiss Re and buy a policy that kicks in once Allstate's liability exceeds $5bn for a given event. "The general answer to any ""is it worth it"" insurance question is ""no,"" because the insurance company is making a profit on the insurance.* To decide if you want the insurance, you need to figure out how much you can afford to pay if something happens, how much they cover, and how badly you want to transfer your risk to them.  If you won't have trouble coming up with the $4000 deductible should you need to, then don't get this extra insurance.  * I did not mean to imply that insurance is always a bad idea or that insurance companies are cheating their customers. Please let me explain further.  When you buy any product from a business, that business is making a profit. And there is nothing wrong with that at all. They are providing a service and should be compensated for their efforts.  Insurance companies also provide a service, but unlike other types of businesses, their product is monetary. You pay them money now, and they might pay you money later. If they pay you more money then you spent, you came out ahead, and if you spend more money then they give you, it was a loss for you.  In order for the insurance company to make a profit, they need to bring in more money than they pay out. In fact, they need to bring in a lot more money then they pay out, because in addition to their profit, they have all the overhead of running a business.  As a result, on average, you will come out behind when you purchase insurance. This means that when you are on the fence about whether or not to purchase any insurance product, the default choice should be ""no.""  On average, you are financially better off without insurance.  Now, that doesn't mean you should never buy insurance. As mentioned by commenter @xiaomy, insurance companies spread risk across all of their customers. If I am in a situation where I have a risk of financial ruin in a certain circumstance, I can eliminate that risk by purchasing insurance. For example, I have term life insurance, because if I were to pass away, it would be financially catastrophic for my family. (I'm hoping that the insurance company makes 100% profit on that deal!) I also continue to buy expensive health insurance because an unexpected medical event would be financially devastating. However, I always decline the extended warranty when I buy a $300 appliance, because I don't have any trouble coming up with another $300 in the unlikely event that it breaks, and I would rather keep the money than contribute to the profits of an insurance company unnecessarily.  In my original answer above, I pointed out how you would determine whether or not to purchase this particular insurance product. This product pays out a bunch of relatively small amounts for certain events, up to a limit of $4000. Would this $4000 be hard for you to come up with if you needed to? If so, get the insurance. But if you are like me and have an emergency fund in place to handle things like this, then you are financially better off declining this policy." "Insurance is a financial product to control risk. The fact that a loss would not be catastrophic simply makes the decision to carry insurance less critical. It is perfectly reasonable to be ""self-insured"" in this case. This is assuming we are discussing replacement of your property vs liability (which you have made clear). Like many other products one buys, a fine reason to purchase insurance is simply because one wants to. Just because you can absorb the loss, does not mean that you want to take on the full risk. I would be careful of your analysis here: Insurance companies on average make money by selling insurance, which means you lose money on average by dealing with them Insurance companies make money based on the cumulative probability that they will have to pay on multiple policies. To make money, they analyze the risk that in a given period they will only pay on a portion of their hundreds of thousands or millions of policies. This is a different analysis than the probability that you will have a loss on your specific asset.  Your risk of a loss is not equivalent to their risk of loss here. The argument that they only 'win' if you individually 'lose' is not a good one." "Or it could be a Robinhood user just messing around with their free commissions. I've seen ""people that work for organizations"" and other analysts go crazy over some completely benign activity. It is like playing poker with a newbie, unpredictable." Anyone who claims they can consistently beat the market and asks you to pay them to tell you how is a liar. This cannot be done, as the market adjusts itself. There's nothing they could possibly learn that analysts and institutional investors don't already know. They earn their money through the subscription fees, not through capital gains on their beat-the-market suggestions, that means that they don't have to rely on themselves to earn money, they only need you to rely on them. They have to provide proof because they cannot lie in advertisements, but if you read carefully, there are many small letters and disclaimers that basically remove any liability from them by saying that they don't take responsibility for anything and don't guarantee anything. "There are several such ""lists."" The one that is maintained by the company is called the shareholder registry. That is a list that the company has given to it by the brokerage firms. It is a start, but not a full list, because many individual shareholders hold their stock with say Merrill Lynch, in ""street name"" or anonymously. A more useful list is the one of institutional ownership maintained by the SEC. Basically, ""large"" holders (of more than 5 percent of the stock) have to register their holdings with the SEC. More to the point, large holders of stocks, the Vanguards, Fidelitys, etc. over a certain size, have to file ALL their holdings of stock with the SEC. These are the people you want to contact if you want to start a proxy fight. The most comprehensive list is held by the Depositary Trust Company. People try to get that list only in rare instances." "Yes, there is a lot they are leaving out, and I would be extremely skeptical of them because of the ""reasons"" they give for being able to charge $0 commissions. Their reasons are that they don't have physical locations and high overhead costs, the reality is that they are burning venture capital on exchange fees until they actually start charging everyone they suckered into opening accounts. They also get paid by exchanges when users provide liquidity. These are called trade rebates in the maker-taker model. They will start offering margin accounts and charging interest. They are [likely] selling trade data to high frequency trading firms that then fill your stock trades at worse prices (Robinhood users are notorious for complaining about the fills). They may well be able to keep commissions low, as that has been a race to the bottom for a long time. But if they were doing their users any actual favors, then they would be also paying users the rebates that exchanges pay them for liquidity. Robinhood isn't doing anything unique as all brokers do what I mentioned along with charging commissions, and it is actually amazing their sales pitch ""$0 commissions because we are just a mobile app lol"" was enough for their customers. They are just being disingenuous." Nothing. Stockbrokers set up nominee accounts, in which they hold shares on behalf of individual investors. Investors are still the legal owners of the shares but their names do not appear on the company’s share register. Nominee accounts are ring-fenced from brokers’ other activities so they are financially secure. "So...if the stock market tanks, the value of these portfolios tank...but faster.  The difference time around being that the customers will be holding all of the toxic assets?  I also gotta say that it feels like there's a lot of, ""hey let's sell insurance and hope that nothing bad ever happens but if it does we go bankrupt and the customer's fucked too!""" "Agreed, but often it seems that gray area is exactly what these ""innovations"" are looking for.  Repeatedly pushing down onto the struggling individual the past responsibilities of the wealthy corporation.    Say this thing picks up steam and is revitalizing Walmart.  John is walking out the door and ""critical"" deliveries need to be made.  John was a bit short last month and couldn't wait for the 2 week insurance reimbursement process.  So despite the team lead's prodding, didn't upgrade his insurance coverage this month.  He didn't want to be ""that guy"" so didn't confirm/deny getting modifying coverage to the lead.  The team lead asks John to take the packages, but doesn't really follow through on the insurance check.  John wrecks his car and his back.  John's insurance company rejects the claim.  The team lead and John are fired because not checking/having the insurance was against written policy, but winked and nodded away all the way back up to the #1 online retailer spot.  So often, obstacles are easily surmounted.  I get the ""personal responsibility"" angle for all involved, but social/financial pressure can be brutal.  The problem is that situations are left as is and the moneyed parties are ""enrichingly ignorant"".  My guess is few compile stats on SOL Uber/Lyft drivers in similar situations."