Are safe deposit boxes actually safe?

Life isn’t a heist movie, so your valuables are secure in a safe deposit bank, right? Not always, according to a horrific investigative report from the July 19, 2019, New York Times. It detailed the saga of one Philip Poniz. In his 30s, he established a safe deposit box with First National State Bank of Edison in Highland Park, N.J. in 1983. In 2014, after a barrage of bank ownership changes, Poniz estimated the value of the watches, coins and other valuables in his box 105 at $10 million. But when he went to open the box at Wells Fargo, the latest owner of his account, it was empty. And Poniz was to learn that he didn’t have federal protections for the missing fortune. At the same time, the bank had a seemingly inexhaustible legal fund that has tied up his case in various courts for five years and counting.

How does this happen? Aside from all those fictional plots involving impersonation, lasers, redirection and possibly magic, here are some ways safe deposit boxes don’t always live up to the name:

Un-safe deposit boxes

Safe deposit boxes are a vivid example of people making assumptions. They are part of banks, but they’re not secured the same way as other accounts. The FDIC does protect savings and checking account deposits up to $250,000. But gleaming appearance aside, the estimated 25 million safe deposit boxes in use in America aren’t governed by any federal law. State laws tend to be scanty and unevenly applied, too. Banks often aren’t required to compensate customers who lose stuff from bank deposit boxes. In other cases, safe-deposit contracts limit the bank’s liability based on rent, not the actual value of the items stored.

In every instance, financial institutions are highly motivated to never pay a dime when bad things happen to safe deposit boxes. “The big banks fight tooth and nail, and prolong and delay — whatever it takes to wear people down,” David P. McGuinn, founder of Safe Deposit Specialists, told the New York Times. “The larger the claim, the more likely they are to battle it for years.”

To be fair, sometimes customers themselves are at fault. One of the top user errors is not reading the fine print on the safe deposit box contract. The cap on the bank’s liability is one of the easiest restrictions to overlook. Wells Fargo, for example, won’t pay more than $500 for safe deposit box contents that are stolen, misplaced or destroyed. JPMorgan Chase has a much higher limit, $25,000, but unwary customers may have millions more at stake. Customers may also make their own safe deposit boxes unsafe by sharing a single box with relatives or friends who aren’t trustworthy or granting access to a thief.

When banks mess up but still won’t pay

In many cases, banks do have the legal high ground in legal cases involving safe deposit box losses. But there’s plenty of evidence that sometimes bank error, questionable court rulings or even outright fraud are part of the equation. Just a few examples include

– Banks closing branches and “losing track” of safe deposit boxes and their contents
– Banks re-renting a box that already contains valuables, which disappear with the new owners
– Judges ruling that even a valid negligence claim wasn’t filed in time
– Courts ruling that customers are bound by the financial institution’s latest safe deposit box terms, even if their original agreement had much more desirable terms.

No bank safe deposit box, now what?

If you still have the need for a safe place for valuables, where do you go if even safe deposit boxes aren’t safe? According to finance experts like Bob Niedt of Kiplinger, you should only store items with high market value, like jewelry, in a burglary-proof home safe that’s bolted to the floor. But a fireproof, waterproof document safe could be ample for documents. Just make sure any flash drives or DVDs won’t be in there, too, unless the safe is designed to maintain internal temperatures below 125F. You can buy a home safe online from places like Amazon, or at home and big box stores like Lowe’s and Sears. It pays to comparison shop since many of the same models are discounted at different places.

Safer safe deposit boxes

If you’re going to stick with the idea of a bank safe deposit box, be sure to learn from others’ mistakes. That means never storing cash in a bank safe. If anything happens to the bank or your cash, it’s not protected by FDIC insurance as it would be in a savings account or certificate of deposit.

Keep your original passport somewhere handy in case you need to make an overseas trip in a hurry. It’s fine to keep copies of your passport in a bank safe deposit box, but not the original. Remember, the safe might not be accessible during the hours when you need to head out quickly. Same with wills: Keep copies in the safe deposit box, but not the originals. Long-standing legal precedent dictates that banks seal a safety deposit box after death until the deceased’s executor can prove a legal right to access it. That can really hold up the estate for your heirs.

Most importantly, if you weren’t spooked by the New York Times piece, do take an extra step if you plan to store coins, jewelry, fine art or other valuables in a safe deposit box. Make sure they’re insured! Just like cash, the FDIC doesn’t insure safe deposit box contents. The bank doesn’t either unless it’s spelled out in your agreement.

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