If you thought that bank lockers are the safest place for your valuables, then think again. For, even the Reserve Bank of India (RBI) has now said that “banks have no liability for loss of valuables in lockers.” This means that you should not expect any compensation for theft or burglary of valuables in safe deposit boxes of banks as the locker hiring agreement absolves them of all liability. This bitter truth was disclosed in an RTI response by the RBI and 19 PSU banks.
Worse, even the private sector banks are not better in this case as even their locker hiring agreements are almost similar in nature. For instance, the locker hiring agreement of a leading private sector bank says, “The Bank shall not be responsible or liable for any loss or deterioration of or damage to the contents of the Locker whether caused by rain, fire, flood, earthquake, lightening, civil commotion, war, riot or any other cause/s not in the control of the Bank and shall also not be liable or responsible for any loss, sustained by the Hirer/s by leaving any articles outside the Locker.”
It further says, “While the Bank will exercise all such normal precautions as it may in its absolute discretion deem fit, does not accept liability or responsibility of any loss or damage whatever sustained to items deposited in the Locker. Accordingly the Hirer/s are advised in their own interest to insure any items of value deposited in the Locker with the Bank.”
This despite the fact that bank lockers do not come for free. Customers are normally charged ranging from Rs 1,000 per annum for a small locker in a non metro city to Rs10,000 per annum for a large-sized locker in a metro city. However, banks argue that the relationship of the bank and the locker holder is that of a lessor and a lessee. Therefore, the bank is not responsible for any loss for whatsoever reason of valuables from the locker.
Experts, however, don’t agree. “Banks usually take the plea that their relationship with a locker holder is that of a landlord and a tenant. Hence they are not liable for any loss due to theft or devastation caused by any act of God, unless the loss is due to the negligence on the part of a bank official. However, that is not the true picture,” says Ashish Kapur, CEO, Invest Shoppe India Ltd.
People hire lockers from banks because they believe in the security systems provided by the banks. When banks get their lockers leased, they undertake to ensure the security of these lockers. Hence they are liable to compensate the customers for any loss incurred by them. “This position of responsibility of the banks for the lockers leased by them has been upheld by various courts as well as the National Consumer Redressal Commission (NCDRC) in several cases. Hence if the bank declines to compensate a customer for any loss due to theft or damage to his locker, he or she should approach NCDRC,” suggests Kapur.
In fact, there have been a few cases in the past where customers have received compensation for loss or damage to locker contents. However, this too is a costly and tiring process. Therefore, if you want to play safe and avoid all these, then it is better to be careful on your part.
“The important aspects to be considered are the terms and conditions regarding the locker hiring process. Read the documents carefully. Make a list of all things you are planning to keep in your locker. This will help you calculate the value of the contents and claim your compensation in case any item goes missing. Always open your locker after the bank employee, who accompanies you to the vault, leaves the place. Also ensure the locker is properly locked before you leave the vault,” says Atul Surana, Certified Financial Planner, Catalyst Financial Planning.
Get Your Valuables Insured
Another way to protect your valuables is to get them insured. Some experts say that barring a few cases of theft at bank lockers each year, they are still the safest place to park your valuables. So, “by splitting valuables between your home and the bank locker hired by you, you can reduce the geographical risk. However, if you are having sleepless nights over the safety of your jewellery and valuable stored in the bank locker, a jewellery insurance cover offered by a general insurance company or a householder’s policy would offer some solace,” says Surana.
Insurers say that bank lockers can be considered a safe option in comparison to keeping jewellery and valuables at your home. However, none of your contents kept in your locker is insured. Also, there have been many incidents of fire and burglary in leading banks in the past, whereby customers were not compensated. Therefore, bank lockers cannot be declared completely safe.
“Bankers generally take a Banker’s Indemnity Package policy, which covers money, securities both in transit and premises, and building from fire and allied perils. As per the RBI, however, banks in any case will not be responsible for the contents kept in a locker by the hirer. When you put your belongings in a locker, generally the bank is unaware about the contents and cannot provide insurance protection. However, some private banks are providing insurance for jewellery items put inside the lockers subject to the terms and conditions. With rising demand, we may see the arrival of some products which may provide insurance to bank lockers subject to particular declarations and terms,” says Rajiv Kumar, MD & CEO, Universal Sompo General Insurance.
Thus, currently there is no specific insurance cover available for jewellery and valuables kept in bank lockers. However, there are some homeowner’s policies available in the market which provide cover to jewellery kept in bank lockers. You may also keep valuables at home in a safe vault and get them insured. Some householder’s insurance cover provides coverage against accidental loss or damage to jewellery and valuables not only while your jewellery and valuables are kept at home, but also while you are travelling anywhere in the world.
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The rates charged for this particular section are around Rs 1000 per lakh of sum insured and in multiples. You can opt for various limits from Rs 2 lakh to Rs 10 lakh. “The customer has to give details of the jewellery, such as type, weight and replacement cost up to items of Rs 10 lakh. However, if the replacement cost of the jewellery is above Rs 10 lakh, the customer is required to submit a valuation certificate at the time of purchasing home insurance,” says Surana.
You should also check if there are any limits applicable under the home insurance cover for jewellery. Companies such as ICICI Lombard and Tata AIA General, among others, apply a sub-limit for the jewellery portion under the home insurance policy. So, if you have opted for a Rs 3-lakh policy, then only 25% or jewellery worth Rs 75,000 would be covered under the policy. Also, during the policy term if you make any high-value gold purchase, then you can inform the insurer about it and extend the protection to the new jewellery.