> ## Documentation Index
> Fetch the complete documentation index at: https://docs.fairground.fi/llms.txt
> Use this file to discover all available pages before exploring further.

# Insurance Fund

> When and how the insurance fund is used

There is one insurance fund shared across the protocol. Each market has access to a **fixed-percentage budget** of the total insurance fund balance per close-out event. This means the amount available to a given market depends on the current fund balance and the market’s configured share.

## When it is used

The insurance fund is part of the protocol’s liquidation backstop. It is used **when a liquidated position’s margin cannot safely cover the outcome** at the time the protocol’s close order fills:

* **Seized at fill**: the position’s **remaining margin is forfeited** and sent to the insurance fund.
* **Underwater at fill**: the position’s margin is negative, so the **insurance fund pays the deficit** to keep the system solvent.

These cases correspond to the “Seized” and “Underwater” position health statuses described on the [Liquidation](/trading/advanced/liquidation) page.

If the insurance fund budget for a market is exceeded during a close-out, [ADL (auto-deleveraging)](/trading/advanced/adl) triggers as a last resort.

## How it is funded

The insurance fund receives capital from two sources:

1. **A share of trading fees:** After minority-side rebates, a portion of the remaining fees from each matching cycle is routed to the insurance fund (see [Fees and Rebates](/trading/fees-rebates)).
2. **Seized position margin:** When a liquidated position is seized at fill, its remaining positive margin is forfeited to the fund.