10 States Allow Credit Unions To Skip NCUA Insurance

Credit unions have long been a trusted financial alternative to traditional banks, offering competitive rates, personalized service, and a member-focused structure. For many consumers, deposit safety is a key reason to choose a credit union, with the assumption that all accounts are federally insured. However, that isn’t always the case.

Currently, the National Credit Union Administration (NCUA) insures approximately 4,604 credit unions in the United States. This federal insurance, backed by the U.S. government, protects deposits up to $250,000 per account.

But not all credit unions participate in this system—an estimated 125 credit unions opt for private insurance instead. While federally insured credit unions are required to carry NCUA coverage, some state-chartered institutions operate under different rules, depending on state regulations.

Related: Best Nationwide Credit Unions

Which States Allow Private Credit Union Insurance

Unlike traditional banks, which must be covered by the Federal Deposit Insurance Corporation (FDIC), credit unions have more flexibility when it comes to deposit insurance. In ten states, credit unions are legally allowed to forgo NCUA insurance and instead use private insurers. These states are:

• Alabama
• California
• Idaho
• Illinois
• Indiana
• Maryland
• Montana
• Nevada
• Ohio
• Texas

Private insurance is often provided by companies such as American Share Insurance (ASI), which operates in these states and insures deposits up to $250,000 per account.

While this coverage may seem similar to NCUA protection, there is a key distinction—private insurance is not backed by the federal government. Instead, it relies on the financial strength of the insurer, meaning there is no government safety net in the event of insurer failure.

How Private Insurance Works

Private credit union insurance works similarly to federal deposit insurance in that it protects member deposits against institutional failure. However, the level of financial oversight and guarantees differ.

For example, American Share Insurance is a member-owned, nonprofit insurer that provides deposit coverage exclusively to credit unions that choose to opt out of the NCUA system. Unlike the NCUA, ASI does not have the backing of the federal government, and its ability to cover deposit losses depends on its own reserves and risk management.

Private insurers often market themselves as a more flexible alternative to NCUA insurance, sometimes offering additional deposit coverage beyond the federal limit. However, because these insurers are not subject to the same federal regulations, there is a potential risk if a credit union fails and the insurer is unable to meet its obligations.

Examples of Privately Insured Credit Unions

While a full list of privately insured credit unions is not publicly available, some well-known examples include:

• Taleris Credit Union (Ohio) – Insured by American Share Insurance.
• SF Fire Credit Union (California) – Insured by American Share Insurance.

Members of these credit unions receive deposit protection through ASI rather than the NCUA. You can tell a credit union is privately insured by looking at the disclaimers at the bottom:

What Happens If A Privately Insured Credit Union Fails?

The risk of credit union failure is relatively low, but it is not impossible. In 2024, two credit unions failed and the NCUA stepped in to take over the credit union. Already in 2025, there has been one credit union failure, according to the NCUA.

If an NCUA-insured credit union fails, the federal government steps in to reimburse depositors up to the insured limit. If a privately insured credit union fails, the responsibility falls on the private insurer to cover deposit losses. If the insurer itself is unable to meet its obligations, depositors may not be fully reimbursed.

How Consumers Can Check Their Credit Union

For consumers, the biggest risk of private insurance is a lack of awareness. Many assume their deposits are federally insured, not realizing their credit union has opted for private coverage instead.

To verify whether a credit union is NCUA-insured, consumers should:

1. Check the Credit Union’s Website: NCUA-insured credit unions are required to display the NCUA logo on their website and marketing materials.
2. Look for Official Notices: Credit unions that use private insurance are required to notify members and potential customers that their deposits are not federally insured.
3. Search the NCUA Database: The NCUA maintains a directory of federally insured credit unions, which can be accessed on its website.
4. Ask the Credit Union Directly: If there is any doubt, contacting the credit union and requesting confirmation of its insurance coverage is the best approach.

Consumers should always verify their credit union’s insurance status before opening an account, ensuring their deposits are protected in the way they expect. Understanding the difference between NCUA and private insurance can help consumers make informed choices about where to keep their money.

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