Safe Deposit Boxes – Are They Safe?

There are an estimated 25 million safe deposit boxes in America. The physical protection of a bank vault, plus a system of access requiring two keys kept by the customer and the bank, would seem to provide a great deal of security. Yet, safe deposit boxes are not as safe as they may seem. An article in the New York Times, July 19, 2019, reported 44 robberies in the preceding five years related to safe deposit boxes. Even worse were numerous bank errors in which boxes were moved, misplaced, drilled open, or closed by mistake.  For example, a large Maryland bank closed several branches and lost hundreds of safe deposit boxes.

The FDIC insures only deposits in accounts at insured institutions. Safe-deposit boxes are considered storage space provided by the bank and do not fall under the insurance laws. In a FDIC Consumer News article entitled Five Things to Know About Safe Deposit Boxes, Home Safes and Your Valuables, – Winter 2018, the author states: “You’re better off stashing your cash in a bank deposit account, like a savings account or certificate of deposit, than in a home safe or a safe deposit box. Among the reasons: “Cash that’s not in a deposit account isn’t protected by FDIC insurance,” noted Luke W. Reynolds, Chief of the FDIC’s Community Outreach Section.  That’s because, by law, the FDIC only insures deposits in deposit accounts at insured institutions and only in the rare instances when a bank fails. A safe deposit box is not a deposit account. It is storage space provided by the bank, so the contents, including cash, checks or other valuables, are not insured by FDIC deposit insurance if damaged or stolen. Also, financial institutions generally do not insure the contents of safe deposit boxes. If you want protection for the valuables in your safe deposit box or home safe, talk to your homeowner’s or renter’s insurance agent about adding coverage under these policies. “And unlike money in a savings account, money in a home safe or safe deposit box cannot earn interest, so the purchasing power of your cash will decrease,” said Reynolds. Also read the terms of the safe deposit box rental agreement, as the bank may limit what you can keep in the box. These limitations could include cash.”

Banks offer safe deposit boxes as a service to customers and may not insure the belongings in the box. For example, Wells Fargo’s safe deposit box contract states that the contents of the safe deposit box are not insured by Wells Fargo or the FDIC. Citigroup limits it’s liability to 500 times the box’s annual rent. And JPMorgan Chase has a $25,000 ceiling on its liability. Bottom line – insure the contents of your safe-deposit box. A rider on their homeowner’s policy can add safe-deposit box insurance at a rate that is far less than the cost of insuring valuables that are kept in your home.