Here’s a thought to keep you awake at night: Stashing something of value in a safe deposit box might not be so safe after all.
A recent New York Times report highlighted the fact that the rules around safe deposit boxes operate in a “legal gray zone” that can leave you vulnerable.
“There are no federal laws governing the boxes; no rules require banks to compensate customers if their property is stolen or destroyed.”
Concerns about the security of safe deposit boxes are not just theoretical.
The Times recounted the story of Philip Poniz, a Colorado resident who stored rare watches, coins and photographs in a Wells Fargo safe deposit box, only to discover that the valuables had mysteriously disappeared.
While some of the items later turned up in a Wells Fargo storage facility, others — valued at more than $10 million in total — remained missing.
Each year, a few hundred people like Poniz report to authorities that the contents of their safe deposit boxes have gone missing, the Times reports.
Even when the bank is clearly at fault, “customers rarely recover more than a small fraction of what they’ve lost — if they recover anything at all,” the newspaper reports.
Alternatives to a safe deposit box
You might be surprised that banks are not responsible for safeguarding the contents of your safe deposit box. But the Federal Deposit Insurance Corp., the government agency that insures bank deposits, offers this stark warning:
“Remember that, by law, FDIC insurance covers only deposit accounts. Also, don’t expect the bank to reimburse you for theft of or damage to the contents of your safe deposit box. Again, you can ask your insurance agent about providing some coverage in your homeowner’s or renter’s policy.”
Bank customers have relatively few options when looking for alternatives to safe deposit boxes. Home safes and hiding places have their own drawbacks.
The FDIC states the sad reality: “No safe deposit box or home safe is completely protected from theft, fire, flood or other loss or damage.”
With that in mind, your best bet might be to insure your items. Doing so might require an insurance rider — or even a separate policy. For more, check out “Your Insurance Company Might Not Pay for These 4 Damages.”
What’s your take on safe deposit boxes? Let us know in comments below or on our Facebook page.