Thursday, June 4, 2009

Should you have a safe deposit box?

Sometimes I live in the land of make believe. I "believe" that I've got everything under control. What usually happens when you live in a fantasy is that something rudely awakens you. This time I'm waking myself up before that rude awakener comes along.

Last night I was clearing out my electronic reading. That's stuff like my Google reader feeds and emails that I've saved for later reading. I came across an article about safe deposit boxes. I almost clicked delete thinking that I knew everything about them. But I read it anyway and it got me thinking...

When I used to work at a credit union safe deposit boxes were a hot commodity. You literally had to wait for someone to die to get a box. I'm not that patient so we've always had a fire proof box for important papers. Honestly, I couldn't understand why anyone would pay between $30-$75/month for a box at the credit union or bank. Well after reading a small blurb I did some Internet searching and discovered that my cheap little fire proof box is just a false sense of security.

Safe deposit box vs. Home box

Safe deposit boxes are kept in a bank or credit union's vault. The companies that manufacture safe deposit boxes and the vaults that house the boxes make them highly "resistant" to fire, flood, heat, earthquakes, hurricanes, explosions or other disastrous conditions. However, the key word here is "resistant." There's no 100 percent guarantee against damage, and substantial losses sometimes occur.

Home boxes vary in their resistance.

  • Theft: A thief might pick up the entire box and carry it away to pry open later.

  • Fire: Though manufactured to resist high heat, the box should be kept where it is least likely to succumb to fire/heat. The best places are lodged in cement, like in your basement or garage floor or walls.

  • Earthquake, flood and other disasters: Many boxes are designed to endure one or two dangers not multiple like say a fire and a flood.

Safe deposit boxes are not covered by deposit insurance. The FDIC and NCUA do not provide insurance for the items in your safe deposit box. Your home owner's insurance also does not cover your safe deposit box. You can insure these items, however, you'll need to discuss that with your insurance agent.

Home boxes are covered by your home owner's policy since they reside in your home.

Be careful about what you put into a safe deposit box. Do not place your original will in a safety deposit box. State vary on laws regarding who can access the box. In Colorado, if you should die only a named beneficiary may open the box upon your death. (Unless the State has reason to access.)

Also don't put in documents that you need to access frequently or in a moments notice, since you'll have to wait until the credit union or bank is open for access.

At least one article that I read on this topic claimed that a safe deposit box is cheaper than a good home box in the long run. I still don't know about that. But I do know that the little box I keep in my home office isn't worth a dang.

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