|Beware of holes
in bank-box safety net
Where's the safest place to keep
your great-grandmother's diamond ring? If you said a safe-deposit
box, you're wrong.
It's true that the chances your valuables will disappear
from the bank vault are slim. But many people mistakenly believe
that even if the worst happens, their property has the extra protection
of federal bank insurance.
The Federal Deposit Insurance Corporation's
$100,000 ($250,000 if it's a retirement account)
guarantee, however, does not extend to safe-deposit
boxes. And, to many homeowners' chagrin, their personal
policies won't cut it either.
David P. McGuinn, founder of Houston-based Safe Deposit
Specialists, has rubbed shoulders with more than 100,000 safe-deposit
managers and written the insiders' Safe Deposit Policy and Procedure
Handbook. The majority of box holders, he insists, believe "the
FDIC has my back."
"When you have a loss, people look for someone
to blame," McGuinn says. "Unfortunately, that's now the
bank because historically we haven't bothered to give them anything
in writing that explains or highlights the clause saying we don't
insure what you put in a safe-deposit box."
What to worry about
The bank boxes do offer security not available
in most homes. But nothing is failsafe. McGuinn knows the potential
trouble spots inside and out:
- Fire: It's not the flames
licking the vault that owners should fret. Heat is the true culprit
that turns papers to ash and liquefy metals inside that steel
oven. And a bomb in any safe-deposit box at the branch would obliterate
everything in that area.
- Theft: If you can prove a
bank employee is behind your disappearing valuables, FDIC spokesman
Frank Gresock says the bank's liability insurance should apply.
Otherwise, you follow the same filing steps with stolen safe-deposit
box items you would with items taken from your home.
- Flood: Rising water is the
most common damage culprit, since banks usually stash the boxes
in a basement. And although manufacturers build vaults to resist
water for a certain period, accompanying lighting, security and
telephone conduits are channels for the water to seep inside and
fill your box like a bathtub.
In cases of theft and fire, the contents coverage
clause of your homeowners policy often covers damage regardless
of the property's physical location. But this isn't a hard-and-fast
rule. Don Beery, vice president and partner of Eustice Insurance
in New Orleans, says check your policy for language stating "we
cover personal property owned or used by an insured while it is
anywhere in the world."
Even this clause might not bail you out in a flood.
Most homeowners' policies exempt this act of Mother Nature. "My
mother-in-law rented a safe-deposit box to hold her stock certificates,"
says Beery. "Then the flood waters covered Mobile, Ala., and
she didn't feel very secure anymore."
Added coverage for special
To be on the safe side, consider a personal articles floater.
These endorsements to a homeowners policy cover pre-established
categories such as jewelry, coin and stamp collections, but agents
have leeway to expand the coverage to areas you need.
"Companies territorially rate personal articles
floaters on the probability of theft where you principally reside,"
Beery explains. Bills of sale, catalog listings and appraisals determine
each insured item's value. The premiums typically hover around 60
cents per $100 in value for jewelry, 45 cents per $100 for furs
and 30 cents per $100 for fine arts.