Insurance within the industry
Due to the value of sums insured kept within the boxes, we believe insurance is a necessity. The insurance will add that extra piece of mind that if the worse was to happen you have an insurance policy which will react.
Therefore you need to ensure the insurance you are purchasing covers you for what you require. It seems each safety deposit centre has its own way of dealing with your insurance needs.
There are 2 main methods of effecting insurance to protect your valuables whilst they are stored at a safety deposit centre:-
1) The safety deposit box rental comes with a certain amount of insurance pre bought by the safety deposit centre. Additional cover can sometimes be purchased at additional costs. The cover is at all times in control of the safety deposit centre.
2) A system platform whereby the client can select the level of cover they require. The policy wording is available for review before purchase, enabling the client to make educated decisions. The cover is at all times in control of you the client, (the insured).
Although other options exist in the market place, these are the most common safety deposit box insurance methods which for the most part operate in the following way.
1) The box rental comes with a fixed amount of insurance cover that has been pre-arranged by the safety deposit centre. This sometimes takes the form of blanket cover based on the estimated number of boxes that could be broken into at the centre within a given time-frame. This method, whilst cheap, unfortunately leaves total loss disasters completely to chance, which in turn could leave you considerably under insured.
Some centres have insurance that is sufficient to cover all their rented boxes but it may not necessarily be sufficient for the value of your individual box contents. Additional cover can sometimes be purchased at additional costs but it still may not satisfy your individual requirements.
Furthermore, within insurance policies there is a special wording called Material Facts. This means that if something is relevant to the insurance it must be disclosed to the insurer. The amount/value stored at a given location is a Material Fact, (because it’s relevant), but as the safety deposit box centre does not actually know how much value is being stored it can’t disclose it to the insurer. The insurer may reasonably believe they are writing a risk with an exposure of £10,000,000 and apply security requirements appropriate to that risk, but in actual fact the risk exposure at that site could be £100,000,000, therefore the pay-out at best may only be a proportional value, (in this example 10%), or at worst not pay out at all!
Finally, within insurance policy wordings there are also items called warranties and endorsements to which adherence and compliance is essential if any claim is to be met in full. Unfortunately claims are continually being turned down due to businesses being non-adherent and non-compliant, and regrettably, as you have no control on how a safety deposit centre business operates regarding the warranties and endorsements, you could unwittingly lose out on a justifiable and legitimate pay-out.
2) An individual insurance policy is set up specifically for your box and its contents. This method allows you to select a sum assured that best matches the contents value of your box. This also means that the insurance company knows the declared overall value of the contents, (Material Fact), so that, subject to any ownership proofs being required, a full values pay out can be made. Additionally this method also allows you to see the policy wording so that not only can both adherence and compliance with the warranties and endorsements be achieved, it can clearly be seen to be suitable for your particular needs.
We believe insurance is an absolute necessity for that extra piece of mind, just in case the worst were to happen. To achieve this peace of mind in full you need to be sure the insurance you are putting in place covers you for what you require.
The Safety Deposit Association works on the principal of ‘Best Practise’ and recommends option 2 for the reasons given above.