Safe Deposit Box: Work, Advantages, Disadvantages & Cost

What is Safe Deposit Box?

A safe deposit box is a secure container, typically located within a bank vault or secured facility, used for storing valuable items such as documents, jewelry, precious metals, cash, or other important possessions. Safe deposit boxes are rented by individuals or businesses from banks or other financial institutions for the purpose of safeguarding these items against theft, loss, or damage. Access to a safe deposit box is typically restricted to the owner or authorized individuals, and it usually requires two keys or a key and a code to open. One key is held by the owner, while the other is held by the bank or facility managing the box.

Geeky Takeaways:

• Safe deposit boxes provide a secure storage solution for valuable items, offering protection against theft, loss, and damage.
• Safe deposit boxes are typically located within bank vaults or secured facilities, providing an extra layer of protection.
• Access to a safe deposit box is restricted to the owner or authorized individuals, typically requiring two keys or a key and a code for opening.

How Safe Deposit Boxes Work?

1. Renting the Box: Individuals who are interested in using a safe deposit box shall first apply for renting a box from a bank or financial institution. A person has to sign a rental agreement with the financial institution or the bank that outlines the terms and conditions, including rental fees, access policies, and the bank’s responsibilities regarding the box.

2. Choosing a Box Size: It is the utmost requirement to choose the size of safe deposit boxes according to the needs of the individual. These boxes come in various sizes to accommodate different storage needs. However, larger boxes may cost more than smaller ones.

3. Storing Items: Renters can store their valuables and important documents in the safe deposit box. Only renters have access to the contents of the box unless they choose to authorize another individual to access it.

4. Security Measures: Safe deposit boxes are kept in highly secured areas. These are kept within the bank’s premises, basically within a vault equipped with advanced security. This protects against theft, fire, and other hazards.

5. Accessing the Box: Only renters have access to the contents of the box unless they choose to authorize another individual to access it. A safe deposit box can be accessed during the bank’s working hours. Renters must use their key, access card, or code to unlock the box. Mostly, banks have their procedures to ensure that only authorized individuals can access the box.

6. Payment of Rental Fees: Rental fees are charged by the owners for the safe deposit box, usually on an annual basis. The bank may terminate the rental agreement and remove the content of the box if the renter fails to pay the rental fees.

Advantages of Safe Deposit Box

1. Security: Safe deposit boxes are kept in highly secured areas. These are kept within the bank’s premises, basically within a vault equipped with advanced security. This protects against theft, fire, and other hazards. The boxes are generally waterproof and are made to withstand any other disaster such as fire, flood, hurricane, etc.

2. Privacy: The contents of a safe deposit box are known only to the renter and to the person who is authorized by the owner. Banks generally do not have access to the contents of the box unless it is required by law or under a specific clause outlined in the rental agreement. This provides a level of privacy and confidentiality for stored items.

3. Protection of Valuables: Safe deposit boxes offer a safe and protected environment for storing valuable items such as jewellery, precious metals and important documents. This helps individuals to safeguard these items from any accidents such as loss, theft, or damage that may occur if stored at home.

4. Organization: A safeduring deposit box helps the individuals and businesses to organize and consolidate their important documents and valuables in one secure location. This makes it easier to locate and access necessary items when needed, especially for documents like property deeds, wills, and birth certificates.

Disadvantages of Safe Deposit Box

1. Limited Access: There is limited access to safe deposit boxes. It can be accessed only during specified working hours of the bank or financial institution. It may be inconvenient for some individuals, especially if the bank’s working hours are limited.

2. Rental Fees: Rental fees are charged by the owners for the safe deposit box, usually on an annual basis. The bank may terminate the rental agreement and remove the content of the box if the renter fails to pay the rental fees.

3. Limited Insurance Coverage: Safe deposit boxes are not insured against loss or damage by the bank. A separate insurance coverage for the items stored in the box is required to be obtained from another insurance provider to secure the assets in case of contingencies.

4. Size Limitations: There is a limit to the size of the box and hence, not all the important accessories can be kept inside the box. Moreover, there are restrictions on what can be stored in these boxes.

Cost of Safe Deposit box

The cost of the safe deposit box depends on the size of the rented box. It can be differentiated as:

• Small Box: These may cost between $20 to $100 per year.
• Medium Box: It may cost between $50 and $200 per year.
• Large Box: These may range from $100 to $500 or more per year.

What You Should Store?

1. Important Documents: Individuals must keep original copies of important documents such as property deeds, wills, birth certificates, etc. in their safe deposit box. These documents are not easily replaceable and are important for legal and financial purposes. These boxes protect important documents from getting deteriorated.

2. Valuables: Valuable items such as jewellery, gemstones, precious metals, etc. are allowed to be stored in the safe deposit box. These items have a high risk associated with them for theft and should be kept in a secure location when not in use.

3. Insurance Policies: Insurance policies, including homeowner’s insurance, auto insurance, and life insurance policies can be stored in the safe deposit box. These documents can be significant in filing insurance claims in the event of loss or damage.

4. Estate Planning Documents: Documents related to estate planning like trusts, powers of attorney, and living wills should be stored in the safe deposit box.

What You Should Not Store?

1. Emergency Items: Items that a person may need in emergencies or on short notice, such as cash, chequebooks, and credit cards, should not be kept in the safe deposit box. These items should be readily accessible when needed.

2. Original Copies of Documents: While it’s essential to store important documents in your safe deposit box, avoid storing only copies of important documents such as wills, trusts, and powers of attorney.

3. Illegal or Hazardous Items: Illegal items, hazardous materials, explosives, or drugs are strictly prohibited by law to be kept in the safe deposit box. Banks may report these activities to authorities if discovered.

4. Items Needed for Travel: Storing items needed for travel shall be avoided, such as passports, travel documents, and emergency cash, in the safe deposit box. These items must be kept in a secure location at home or with the owner of the documents.

Safe Deposit Box – FAQs

How do safe deposit boxes work?

Safe deposit boxes are rented out to individuals or businesses by banks or financial institutions. Renters can store valuables and important documents in the box, which is kept in a highly secure area within the bank’s premises.

How secure are safe deposit boxes?

Safe deposit boxes are stored in highly secure areas within bank vaults or secure facilities, equipped with advanced security measures such as surveillance cameras, alarms, and access controls. This provides protection against theft, fire, and other hazards.

What happens if a person loses the key to the safe deposit box?

If a person loses the key to safe deposit box then he should contact the respected bank or financial institution immediately. They may have procedures in place to assist in gaining access to the safe box.

Are items in a safe deposit box insured?

Safe deposit boxes may not be insured against loss or damage by the bank. Renters may need to obtain separate insurance coverage for the items stored in the box, either through their homeowner’s insurance policy or a separate insurance provider.