Over time, your valuables change, and so do your options to protect them. Here are a few choices, including safe deposit boxes and home safes, along with suggestions on how to assess each option for your specific needs.
Think about what should or should not be kept in a bank's safe deposit box. Good candidates for a safe deposit box include originals of key documents, such as birth certificates, property deeds, car titles and U.S. Savings Bonds that haven't been converted into electronic securities. Other possibilities for the box include family keepsakes, valuable collections, pictures or videos of your home's contents for insurance purposes, and irreplaceable photos.
Be mindful not to use your bank safe deposit box to store anything you might need to access quickly or when the bank is not open. That could include passports and originals of your "powers of attorney" that authorize others to transact business or make decisions about medical care on your behalf. For guidance on where to store your original will, check with an attorney about what is required or recommended based on state law.
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.
- A home safe isn't a true replacement for a bank's safe deposit box. A home safe could be used to store replaceable items you may need immediate access to, such as a passport. But home safes are not as secure as safe deposit boxes. "A burglar could more easily break into your home and open the safe than get inside your safe deposit box at your bank," said Reynolds.
- No safe deposit box or home safe is completely protected from theft, fire, flood or other loss or damage. Consider taking precautions, such as protecting against water damage by placing items in water-safe, zippered plastic bags or other plastic containers that can be resealed. And, don't keep identifying information on or near your safe deposit box key, such as the box number and the bank's name, in case of loss or theft. Remember that, by law, FDIC insurance covers only deposit accounts. Also, don't expect the bank to reimburse you for theft of or damage to the contents of your safe deposit box. Again, you can ask your insurance agent about providing some coverage in your homeowner's or renter's policy.
Be mindful of whom you allow to access your safe deposit box. You can jointly rent a safe deposit box with one or more people whom you would like to give unrestricted access. Keep in mind, though, that your bank would likely not be responsible for anything that people you authorize to enter the box remove without your permission.
Who has access to your safe deposit box if you die? "The rules under which safe deposit boxes may be accessed upon the death of a safe deposit box owner depends on state law," said FDIC Counsel Richard Schwartz. "These rules restrict entry into the safe deposit box to certain individuals and permit entry only under controlled situations."
This is an updated version of an article originally published in the Fall 2009 FDIC Consumer News.