This question doesn't duplicate this other that doesn't compare CDIC with DICO. As of Dec 6 2018:

DICO [Deposit Insurance Corporation of Ontario] insures deposits up to $250,000.

We CDIC insure eligible deposits at each member institution up to a maximum of $100,000 (principal and interest combined) per depositor per insured category.

Please remind me to update this post, after:

The Government of Canada has approved changes to the CDIC Act to modernize and enhance CDIC deposit protection.

These changes will be reflected on this website when they take effect. Until then, our current coverage rules apply.

Why does DICO insure until $250K, but CDIC until $100K?

This can't be exactly answered. These institutions were created in the interest of small depositors and have different roles.

Most Deposit Insurance Organizations are Government sponsored, act like insurance company; take the premium from members [Financial Institutions] and pay the insurance in case of event like bankruptcy.

The DICO is focused on local Credit Union and created by local municipal authority. Maybe it did so to support (or encourage) credit unions. Hence the coverage is large; giving comfort to small investors to Bank with Credit Unions. They maybe charging more hefty premium from members to provide such large coverage.

The CDIC is more at national level and members can be Banks, Credit unions, loan and trust companies, etc. They felt that coverage of 100K is sufficient and would reduce the premium the members are paying.

Again there is no reason that CDIC can't insure up to 250K or even 1 Million. It depends on the outlook to determine/define "who the small investors" are and how best to protect them in case of bankruptcy. These are policy decisions that have their own deliberations.

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