Safe Deposit Box contents are not insured by most Banks and are not insured by the FDIC. If you have signed a safe deposit box contract with the Bank, you most likely have to read directly on the contract that the contents of your box are not insured.
In light of the recent storms like Hurricane Sandy that have swept through our areas, many customers may have put their valuables into safe deposit boxes prior to the storms to ensure their safety. However, I am sure that no one expected Bank Safe Deposit Box vaults to be submerged under water. Now, many customers are returning to their safe deposit boxes to find damages that cannot be repaired.
There was one case I read about which involved about 1,000 boxes that were in several of Chase branches, including the one in Edgewater, NJ, which were affected by flooding, and customers were being invited to come open the boxes to assess the damage. There were also branches of Bank of America in South River, Union Beach, Seaside Heights and Ship Bottom that were affected.
Here is what the FDIC website says about damage to safe-deposit box contents on a consumer news page at its website:
"...Unless your bank is found to be negligent in the way it handled or protected your safe-deposit box, do not expect the bank or its private insurance to reimburse you for any damage or loss … check whether your homeowners' or tenant's insurance policy will cover it."
But did you know that it is possible for you to GET insurance? Yes – it is. In a recent NJ Bankers Bulletin, Kearny Federal Savings Bank entered into an agreement with a company called “Safe Deposit Box Insurance Company” (SDBIC), which can provide its customers with safe deposit box insurance. This easily obtained add-on product insures all property stored in a safe deposit box for the coverage amount selected, without disclosure of the contents or need for expensive appraisals, preserving the box holder’s confidentiality and privacy. This company insures against floods, fires, terrorist attacks, burglaries, robberies, and all other man-made and natural disasters; covering all property in the box including precious metals, cash, gem stones, diamonds, and even personal documents.
Not only can Banks obtain this insurance for their customers, but individuals can also retrieve insurance for themselves. I’ve seen quotes as low as $25 per year for $5,000 worth of coverage. Not too bad if you live in an area where you anticipate it possible for a natural disaster to strike.
Another option is to add an endorsement to a homeowners policy which would cover pre-established categories such as jewelry, coin and stamp collections, but insurance companies have leeway to expand the coverage to areas you need. This option, however, may tend to be a bit more pricey.
While it appears in the banking industry that the volume of people maintaining a safe deposit boxes might be significantly reduced from many years ago, and a lot of Bank’s don’t even offer safe deposit boxes, if you do maintain a box with valuables, you might want to look into obtaining insurance. And if you are a Bank, you might want to consider this service to increase customer satisfaction and potentially increase fee income from box rentals.
Quality Control Specialist
Sharon Geiger, Quality Control Specialist Sharon has 27 years banking experience, 21 of which have been involved in internal audit. She has extensive knowledge of all aspects of the banking industry, with a particular emphasis on regulatory compliance and identifying risks and controls. As QCR Specialist, she performs Quality Control Reviews to ensure all workpapers and reports are completed in compliance with the firm's standards.