On July 19 the New York Times published “Safe Deposit Boxes Aren’t Safe”

The article and online commentary raised two important points:

1. It’s important to understand how much protection is available for your items in a bank safe deposit box.
2. The agreement for your safe deposit box may require binding arbitration for disputes in addition to very limited liability from the bank should items be lost, stolen or damaged. Binding arbitration provisions extend beyond disputes for safety deposit boxes and are inserted in agreements throughout the financial services industry. What is particularly newsworthy is that Chase announced in early June that the reintroduction of binding arbitration for their credit card accounts effective August 7, 2019 unless the account holder rejects by “snail mail.” With 47 million accounts there is a good chance that one of our readers may be affected which is why we decided to include this information in our Chartwell Bulletin.

Is your safe deposit box really “safe”?

Bank vaults are among the most secure places to keep valuable articles however many consumers are unaware that most banks typically limit their safe deposit liability. For example:

Wells Fargo $500

Citigroup 500 times the box’s annual rent

JP Morgan Chase up to a maximum of $25,000

There have been a few cinematic-style bank heists such as the April 2015 London Hatton Garden Safe Deposit Company where four elderly thieves disabled the security system and drilled through the six foot vault walls reinforced with concrete over an Easter weekend. The initial estimates of the loss were reported to be around $300 million which made headlines but the actual losses were closer to $22 million . Robberies of bank vaults are rare. In 2015 there were 26 reported in the US and a total of 44 ‘events’ which included natural disasters according to a Safe Deposit Bank Insurance Coverage survey. 

Bank vault fires are rare when they are encased in heavy steel structures. They are, however, neither flood-proof nor destruction-proof. Thousands of negatives of photos taken by John F. Kennedy’s personal photographer, Jacques Lowe, were lost when the safe deposit vault at 5 World Trade Center was destroyed in the 9/11 bombings. When safe deposit boxes are relocated during bank closings the contents of uncollected boxes are at risk and there have been bank errors where the wrong boxes are emptied.

If valuable items are kept in a bank vault we recommend a visit at least once every quarter. Even if you miss a letter that may have been mailed to you informing you about vault changes or consolidations you will see the notice if you visit the bank vault and you can check on the inventory of your safe deposit box.

Insurance for items in safe deposit boxes

Under most homeowners and renters policies contents are typically covered wherever they are stored. Most items that are kept in safe deposit boxes are either jewelry, silver and/or precious metals and policy language for contents coverage usually limits the amount of coverage for unscheduled jewelry to $5,000, unscheduled silver to $10,000 and money and bullion to $1,500. Vault insurance coverage for jewelry, silver and bullion is usually available for about $2-$3 per $1,000. With advance notification to the insurer, often as simple as contacting the agent during business hours, items may be removed from the vault for up to a week a few times per year.

Carefully consider whether or not to schedule your valuables stored in safe deposit boxes. Paying the extra premium will help to maximize protection of items stored in a bank vault.

Your right as a consumer to opt out of binding arbitration from Chase expires on August 7, 2019

Many banks agreed to halt the requirement for binding arbitration as part of a settlement in a class action lawsuit during the height of the financial crisis in 2009. In May 2016 shortly before President Obama left office, the Consumer Financial Protection Bureau (CFPB) issued rules that prohibited mandatory arbitration. These contract provisions known as “gotchas” prevent consumers from joining class action lawsuits and limit court actions to small-claims court. The following year President Trump signed a joint resolution of Congress reversing the Arbitration Agreements Rule.

In early June Chase reintroduced the binding arbitration provision. Cardholders have until August 7 to opt out of the mandatory arbitration by sending a letter (mail not email). A Chartwellian tried unsuccessfully to locate the Chase credit card agreement on the customer portal, then called Chase customer service only to be told the agreement could not be emailed and only be sent through the mail. Knowing that the deadline to opt out is looming our Chartwellian asked for the address to opt out of arbitration and was told it was only available through the mail. This experience reinforced her resolve to opt out of binding arbitration. The address as reported in the press is PO Box 15298 Wilmington, DE  19850-5298. A separate letter should be sent for each account if you have multiple cards.  FedEx will not deliver to a PO box so in order to prove delivery the letter must be sent with a tracking receipt from a post office, a fairly tedious process.   Agreements of the card issuers are available on the website of the Consumer Financial Protection Bureau (CFPB), however the site is updated only to the fourth quarter of 2018 and the newest agreements, including the recent changes from Chase are not yet posted.

Chartwell Bulletins are produced by Chartwell Insurance Services an independent insurance broker specializing in the personal asset protection of successful individuals.  The contents of this Bulletin are informational only and Chartwell Insurance Services is not providing legal advice.

A representative of Chartwell Insurance Services will be pleased to discuss all aspects of your personal insurance.  Contact:  Rebecca Korach Woan   312-645-1200 or rwoan@chartwellins.com