The NY Times recently published an article stating Safe Deposit Boxes Aren’t Safe. I was a little disappointed in the article because it was a bit sensational, but I suppose the takeaway is important for folks that made other assumptions. A more accurate headline would be “Safe Deposit Box Contents Aren’t Insured”.
No federal laws require banks to compensate customers for lost property from a safe deposit box. Usually, you have agreed in the rental contract that that maximum liability is on the order of $1,000. Unfortunately, there have been rare cases where folks have lost the contents of your safe deposit box. Natural disasters like fire, flood, or even a movie-style bank robbery have occurred. The NYT article told the story of a man who stored $10 million of rare watches in a safe deposit box and lost them when the bank mistakenly emptied it because it thought the owner stopped paying the rental fees.
If you think about it, why would a bank agree to charge you maybe $100 a year in rental fees, but be responsible for $10 million of property? What if it was $100 million? That doesn’t sound like a good business model. How do they know what you put in there? You could put in a silver Casio and say it was a Patek Philippe. This is the domain of insurance and personal articles policies. Your homeowner’s policy may offer limited coverage on safe deposit box contents, but you can bet they won’t cover $10 million without asking a lot more questions.
Despite this lack of insurance, having access to a small box inside a bank’s vault for $30 a year can still be a great deal. Why not just store copies of valuable documents and photos? The odds of losing the contents are still quite low. Although they have little monetary value on the open market, these items are still quite valuable to me:
- Copies of identity documents (birth certificates, marriage licenses, Social Security cards, passports)
- Copies of real estate deeds and auto titles
- Copies of paper savings bonds
- Copies of mortgage and other loan documents
- Copies of insurance policies
- Copies of your home inventory (paper and digital)
- Additional digital scans of above?
- Copies of personal photos on flash drive
The idea is that the important contents of my house are consumed in a fire, I can still rebuild my life. Sometimes things get lost, and most recovery procedures work much more smoothly with a copy of the original. I like having physical documents because flash drives can fail as well.
Some people might argue to keep the original in the safe deposit box and the copies at home. That is certainly debatable. You might even keep some originals in one and the rest in the other. However, I would first make sure you have copies of all important documents in two different, secure locations.
Bottom line. The stuff in your safe deposit box isn’t insured against loss by your bank. If something has a high market value, make sure you insure it independently. Safe deposit box can still be useful for keeping copies of important documents.
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Why put copies in the safe? The best way to deal with copies is scan and keep on local storage plus upload in the cloud.
I keep originals in the safe. Yes, it is not insured but probably still a bit more secure than the house. I also keep some valuables that I don’t need immediate access to. One example is leftover foreign cash such as euros that I know I can use on the next trip. And a flash with backups.
I get the safe box from BofA as a part of Preferred Plat. It’s a tiny 2×5 so not much more can fit in there.
Also I don’t think you can get a box for $30. Unless you get a free deal, the cost usually is around $80-$100 for the smallest box.
“$30 a year”?! In my neck of the woods, it’s $120 and keeps going up every year like clockwork. Talk about subscription revenue.
I got to disagree with you bro. I and everyone I know owns a big gun safe. Not to own firearms but to put valuables in. Fireproof, waterproof, and bolted down into the concrete of your home. Place can burn down but the contents of the safe will be there. Price is a little costly but if you plan on living there for a while, it’s a worthwhile investment.
I don’t disagree with that at all. I think that’s a perfect primary setup, but if you’re going that far, why not also have a Plan B? Simply put an extra a copy of things in the safe deposit box.
Even a fire-rated safe can get hot enough for the things inside to end up as ashes if the fire is hot enough. There are many examples from the California wildfires. Some safes survived, but some did not. Not every house felt the same intensity of fire.
Waterproofing is even harder to achieve and those seals will only degrade over time.
I have a safe deposit box, just large enough to store copies of family documents – it costs me $40/year. I also take a backup of my files yearly on an encrypted thumb drive and put that in the box.
If people pay attention to the bank and open the box occasionally no one should have the same problem the man in the article did. He not only put expensive items in, he didn’t check on them and the bank was purchased and the boxes re-numbered, adding even more confusion.
Where should he have put the collection?
Why pay any fee to store copies ?
If someone only stores copies, then why not scan them as PDF files and store in one of the free cloud service offerings? Some of them even keep back up copies in other regions of the globe for safety. With additional fee, you can back up all of your photos and videos as well.
Cloud is good, especially if you use encryption. There are still reasons for a hard physical copy, in my opinion. Some of my “copies” are notarized official copies of documents like birth certificates. Do I want to store copies of my savings bonds in the cloud? Not really, even with encryption. Think of how much Bitcoin has been stolen from “safe” servers.
If something happens suddenly, it’s quite easy to lose a password and your loved ones can’t access your cloud account (or even know it exists in some cases). Another problem with cloud is it’s so easy to store stuff that you just put everything in there. A safe deposit key that leads to a curated physical stash of the most important documents would likely be appreciated.