9-11 Attacks Spark Safe Deposit Lawsuits

by Dave McGuinn, BOL Guru
BIO AND CONTACT INFO

The events that followed September 11 have significantly impacted the safe deposit industry nationwide. Since the attacks on the world Trade Center, one unfortunate New York bank has been confronted with some very difficult challenges and tough decisions.

Vault Damaged
This large financial institution provided safe deposit services at its location within the 5 World Trade Center building. Though badly burned and damaged by the attack, the building was left standing.

The 2500 safe deposit boxes, located in the second floor vault, protected valuables of many New York residents. The bank reassured worried renters that, despite the devastation, they would be able to recover their box contents.

Bank Reconsiders
Three months later, the bank reversed its position and notified the renters that the boxes had been so severely damaged that they were not salvageable. The bank indicated that the building would be demolished and these boxes along with their contents would be disposed of in a Staten Island landfill, along with other Trade Center rubble.

Following on the heels of this disturbing revelation, the distraught renters learned that, despite the bank's inability to salvage the boxes, it had "miraculously? managed to recover from this same ravaged building cash totaling hundreds of thousands of dollars.

Litigation Follows
Several concerned renters initiated a >
Confusion Nationwide
All financial institutions zealously attempt to assure consumers that all of their deposits are insured for at least $100,000. It is incumbent upon this institution to guard against claims that suggest in any way that this protection extends to safe deposit box contents. To do otherwise creates confusion and misconceptions, which could create potential liability.

Get Prepared
Listed below are ten safe deposit questions that, if answered, "Yes", can help you avoid risks. If you answer "No" you may have some hidden liability that you are not aware of.

1. Does your lease agreement have a very clear statement that says; "No insurance coverage of any kind is provided by the financial institution to cover safe deposit box contents", and is a copy of this lease given to each new renter?





2. Is a separate "No Insurance Disclosure" form, printed in at least eight-point bold type, given to each new renter?





3. Do you display a carefully worded, 8x10, "No Insurance Sign" inside or near the vault area and does it clearly state that obtaining insurance protection is the renter's responsibility?



4. Do you avoid using misleading statements, promises or guarantees, such as "fireproof", "waterproof", "bombproof" or "burglarproof" in your safe deposit marketing brochures, statement stuffers or other promotional items?



5. If you disclose your annual box rental rates in a "Service Fee" brochure, do you have a bold statement under these rates that says; "No insurance coverage is provided on box contents by FDIC or this financial institution"? (FDIC requirements to display insurance logos on these forms can mislead consumers).



6. Are employees trained to be very careful when answering consumer questions about insurance or how much security is provided with this safe deposit service? (Difficult questions should be referred to a supervisor.)



7. Do you provide consumers with specific "Question and Answer" brochures that correctly answer their questions about insurance coverage, physical vault security and the many other areas that should be disclosed?



8. Do you avoid displaying an FDIC sign or logo on your vault door, inside the vault, on safe deposit marketing banners or brochures, or on the small key envelopes provided to renters to store their box keys?



9. If you experience a disaster, (floods, fires, bombs, etc.), are employees trained to be very careful when making statements to the consumers or news media about the recovery efforts, safety or security of these box contents?



10. After a disaster, would you provide the same degree of care, security and recovery efforts for the box renter's valuables as you would for your own assets?

In Conclusion
How did you do on the test? If you had any "No" answers and you would like to find out how to improve your operation and reduce its liability, a complimentary safe deposit "No Insurance" package is available. Simply contact BOL Guru Dave McGuinn at (713) 937-9929 or email your fax number to sdspec@aol.com and request this valuable information. You must test your security, marketing and disclosure procedures now, not after a disaster.

Be sure to check out the Safe Deposit Insurance Disclosure Kit in the BOL Store.

First published on BankersOnline.com 2/18/02