Is My Safe Deposit Box Safe?
Originally Published Fall 2019
The New York Times recently published "Safe Deposit Boxes Aren't Safe" (July 19, 2019 by Stacy Cowley). The article and online commentary raised two important points:
1) It's important to understand how much protection is available for your items in a safe deposit box.
2) The agreement for your safe deposit box may require binding arbitration for disputes in addition to very limited liability from the bank should items be lost or damaged. Binding arbitration provisions extend beyond disputes for safety deposit boxes and inserted in the language of agreements throughout the financial services industry. What is particularly newsworthy is that Chase announced in early June that the reintroduction of binding arbitration for their credit card accounts effective August 7, 2019 unless the account holder rejects by snail mail. With 47 million accounts there is a good chance that one of our readers may be affected which is why we decided to include this information in our Chartwell Bulletin.
Is your safe deposit box really "safe?"
Bank vaults are among the most secure places to keep valuable articles however many consumers are unaware that most banks limit their safe deposit liability. For example:
· Wells Fargo—$500
· Citigroup—500 times the box's annual rent
· JP Morgan Chase—up to a maximum of $25,000
There are a few cinematic-style bank heists such as the April 2015 London Hatton Garden Safe Deposit Company where four elderly thieves disabled the security system and drilled through the six-foot vault walls reinforced with concrete over an Easter weekend. The initial estimates of the loss were re- ported to be around $300 million which made headlines, but the actual losses were closer to $22 million. Robberies of bank vaults are rare. In 2015 there were 26 reported in the US and a total of 44 'events' which included natural disasters according to a Safe Deposit Bank Insurance coverage survey.
Bank vault fires are rare when they are contained by heavy steel structures. They are neither flood-proof nor destruction-proof. Thousands of negatives of photos taken by John F Kennedy's personal photographer, Jacques Lowe, were lost when the safe deposit vault at 5 World Trade Center was destroyed in the 9/11 bombings. When safe deposit boxes are relocated during bank closings the contents of uncollected boxes are at risk and there have been bank errors where the wrong boxes are emptied.
If valuable items are kept in a bank vault, we recommend a visit at least once every quarter. Even if you miss a letter about vault changes or consolidations you will see the notice and you can check on the inventory of your safe deposit box.
Insurance for items in safe deposit boxes
Contents are covered wherever they are stored under most homeowners and renters policies. However, most items that are kept in safe deposit boxes are either jewelry, silver and precious metals. Policy language for contents coverage usually limits the amount of coverage for unscheduled jewelry to $5,000, un- scheduled silver to $10,000 and money and bullion to $1,500. Vault insurance coverage for jewelry, silver and bullion is avail- able for about $2-$3 per $1,000. With advance notification to the insurer, as simple as contacting the agent during business hours, items may be removed from the vault for up to a week a few times per year.
Carefully consider whether or not to insure your valuables stored in safe deposit boxes
Chartwell Bulletins are produced by Chartwell Insurance Services, Inc., an independent insurance broker specializing in the personal asset protection of high-net-worth individuals. Chartwell Bulletins address issues of general interest and since coverages vary by company and by state should not be taken as an interpretation of a particular policy or advice on any individual situation.
A representative of Chartwell Insurance Services will be pleased to discuss all aspects of your personal insurance.
Contact: Rebecca Korach Woan 312-645-1200 or firstname.lastname@example.org