Safes are suddenly fashionable. They're not just dull, gray,
square boxes -- many are pieces of art, cleverly designed decoys,
or a combo of stealth and sturdy.
People are stashing their cash and valuables in home safes for a
variety of reasons. Perhaps they don't trust the banks, or think
the banks might fail. Other savers may be leery of the stock
market. And then there are nervous Nellies prepping for the end of
world who want to have cash on hand when the calamity comes.
Whatever the reasons, these people feel that a home safe is the
place for their cash, gold, jewelry and other treasures. While the
standard, no-fuss safe can be purchased from the hardware store for
$50, fancy safes can run into the thousands and even tens of
thousands of dollars for the 1 percenters who spare no expense for
the luxury of being able to sleep soundly.
But is it all for naught?
"People need to wake up. They think they are protecting
themselves, but they may actually be putting themselves at more
risk," says Michael Kresh, a Certified Financial Planner with
Creative Wealth Management in Islandia, N.Y. "Sure you want to have
some cash at home, but more than a
little
feels unsafe," he says.
Not very safe after all
Quite simply, keeping cash, gold, jewels or any important
documents in a home safe is not a secure choice, says Ted Sarenski,
president and CEO of Blue Ocean Strategic Capital in Syracuse,
N.Y.
For starters, some small home safes that state they are
fireproof are not necessarily so. In addition, the heat in a house
can get so intense that the contents of the safe will be destroyed
without an actual fire getting inside, says Sarenski.
And the mere presence of a safe in your home can be an
invitation to thieves. Typical home safes are not so large that
they can't easily be stolen by someone who is aware the safe
exists.
"Are you putting a target on your back?" asks Rich Arzaga,
founder of Cornerstone Wealth Management in San Ramon, Calif.
If your safe is stolen, don't assume your insurer always will
have your back when goodies are destroyed or pirated away by
bandits. "There are limits on recovery from home insurance claims,"
cautions Nick McCummings, manager of the Harrington Insurance
Agency, which has offices in Massachusetts.
For example, standard
home insurance
policies generally protect money, gold and silver. Check your
policy for the limits though - it might be as low as $200. Even the
carriers that market to the affluent may max out coverage at $2,500
per loss for those items, says R. Todd Rockefeller of DeRosa,
Rockefeller, Sohigian & Werdal in Harrison, N.Y.
Standard industry jewelry limits range from $500 to $5,000 for
top carriers.
Additional coverage for jewelry can be purchased easily. You can
get an insurance rider, floater or endorsement. Ask your agent
which is best for you. Jewelry can be itemized and scheduled for a
value upon which you and the insurer agree. Coverage is worldwide,
no deductible applies and loss by mysterious disappearance is
included, says Rockefeller. Blanket limits can also be purchased.
Such a limit is a bucket of coverage to claim lost jewelry items,
generally up to $10,000 per item, he adds.
Insurance claims for theft
Even with home insurance coverage, don't expect the claims
process to be a breeze. You'll need proof. You've probably heard
the advice plenty of times: Keep detailed records of what is in the
safe. That means you need receipts, invoices and pictures or video
of your items. For really expensive items like exquisite jewelry,
an appraisal stating its value is a worthwhile investment. Remember
to update your inventory list -- not just for yourself, but for
your insurance company.
The documentation you provide will have a direct bearing on the
ease of the claims process. If you're making a claim for theft of
cash, ATM or banking transaction receipts are excellent, says Kevin
Lynch, an assistant professor of insurance at The American College
in Bryn Mawr, Pa. But even that may not be good enough for some
insurers.
"Say you had $5,000 cash stolen: The insurance company will want
proof. Even if you went to the bank and withdrew $5,000, if it
wasn't stolen on that same day, the insurance company could
question you about how they could be sure you didn't spend the
money," says Lynch.
Also, do the math. Is it worth filing a claim? One theft claim
typically won't jack up your premium when it's time to renew your
policy. But that rule doesn't always hold.
"In many instances, even one claim may increase your premium
upon renewal. I always advise my insureds about the risk of an
increase versus filing a claim. If a policy is increased by $250
for three years for a $500 stolen cash claim, then I would advise
against the claim. The increase is actually more over the
three-year period than the recovery of the $500," says
McCummings.
Multiple claims could cause you to be nonrenewed and lead to
difficulty in securing future coverage, says Lynch.
Consider, too, your deductible. If $700 in jewelry was stolen
and your deductible is $500, that $200 may not do you much good.
"Save the claim for a larger, more catastrophic loss for which
insurance was designed," says Rockefeller.
The final analysis
All of this begs the question: Is it worth keeping your
valuables in a home safe? You may be better off putting jewelry and
other valuables in a safe-deposit box at a bank.
"In a bank, there is a lot more security. The bank has [an
insurance] policy with higher limits than you can get with yours,"
says Peter Moraga, a spokesperson for the Insurance Information
Network of California, a nonprofit trade association.
Finally, says Sarenski, "The best place for cash is in the bank
in a bank account. You have proof through your bank account
statements or online access, and if the bank goes bankrupt, your
cash is insured up to $250,000" by the Federal Deposit Insurance
Corp.