Posted by Mike Smith :: December 11, 2008 @ 9:36 am

Safe deposit boxes are a wonderful way to store documents and valuables in a secure location, but they do have their limitations. The destruction of the World Trade Center and effects of recent natural disasters show just how vulnerable they can be.

With more and more people moving assets into cash during this economic downturn, experts warn against storing cash in a safe deposit box. A full 25% of respondents to a survey admitted to storing cash or coins in their safe deposit boxes. While homeowner’s insurance policies can – and should – be amended to cover safe deposit box contents, even in those cases cash will not be covered. The safest place to store your cash is most likely in an FDIC-insured bank account.

If you are worried about having access to cash during a natural disaster or similar event, you may consider stockpiling some cash in a fireproof safe in your home. Such a safe is also an excellent place to store documents that may need to be accessed outside of bank hours, such as a passport.

Contents of safe deposit boxes should be inventoried whenever changes are made. Documenting the contents and keeping copies of any important paperwork can make physical losses less painful and thus is a worthwhile investment of your time. Having a spouse or trusted family member listed on the access list could also ease the removal of contents in the event of your death. For that reason, having a secret safe deposit box is generally not advised.

For most cases, a combination of an FDIC-insured bank account, safe deposit box, and fireproof safe will serve all of your security needs. The safe deposit box can play an important role in a security plan but understanding its limitations can reduce the risk of using it inappropriately.

What do you store in your safe deposit box?