What Happens To Your Safe Deposit Box If The Bank Fails?

When banks fail one of two things usually happens, either another bank will purchase the remaining assets of the bank or it fall under receivership of the federal government. If the branch where your safe deposit box is becomes part of a different bank you may need to sign a new lease agreement, but everything generally will stay the same at least for a short period of time. If the bank falls into government receivership, the receivership will contact you to notify you. If you do not claim your property within a certain period of time, your safe deposit box will be opened and the contents siezed by the state unclaimed property fund. Depending on the state you are in the contents may be held for a particular period of time and then sold at auction, or they may be sold at auction at the states earliest convience. Either way the owner or the heirs of the contents of the box can still claim the money by filing a claim with the state that sieze the property.

Nothing happens to them. You can remove your property if you'd like, but it's not really at risk from bank failure because it's actually physically in the box. The reason why money in a bank account is at risk (and therefore must be insured with the FDIC) is because only a fraction of the cash in the accounts actually at the bank. The rest is loaned out or some such. A run on deposits would cause the bank to run out of money and not everybody would get theirs back (which is why the FDIC exists - to insure against a run). If there was a "run" on safety deposit boxes, all that would happen is that the boxes would get emptied (by their owners).

I had accounts at Wachovia when it started falling over and the FDIC negotiated the sale to Wells Fargo. From my point of view it was the biggest non-event ever. I didn't have to do anything except set up my password, etc. at the new web site. The biggest change was the signage at the branches and logos on my statements. I even have the same tellers selling me coins.

Yep, I knew the FDIC didn't insure safe deposit boxes. That's the whole reason I was worried in the first place...

Earthquakes are our biggest concern here in California; we rarely have to worry about any other natural disasters. I've had my SDB for almost 7 years now and have been told that they would contact you in any event, including bank closure. Your contents are safe as long as the vault is not broken into of course.

Ha, I hear you. Yeah, wildfires are a big problem here...never been personally affected by one, just watched as the smoke fills our already healthy air here.
We are not going to retire here but in the Mid-West and I've lived through a tornado in Oklahoma so, they don't scare me. We are due for a pretty big one here shortly according to Cal-Tech. I've got plenty of food, water, and ammo ;)

Since the contents of the SDB is not insured by the FDIC, if you open the box and its contents are missing, does that mean you have no claim? After all, the bank has no idea of what was in there, rightfully so. I hear there is a dual key system for SDB where the bank employee and you have to open the box together after logs are signed. Couldn't the customer's key be duplicated by a bank employee?

Mostly everything XavierOfGreen has stated is what would happen if a bank fails. By me there have been many banks that have failed for one reason or other. At one I was notified to take my belongings out of the SDB as soon as possible. There was a 30 day period to do this and if not done, the contents would be removed and put into containers that would be taken to a nearby bank. Then with paper work you could still claim your belongings for up to one year.
At another bank where I had a SDB, it was taken over by Charter one which was eventually taken over by BOA. The branch where my safe deposit box was located also was to be shut down. During all this I was notified that if I still wanted a SDB it could be now located at a different BOA place, either given a larger one for no extra charge or one free year or a refund for what time was left on my existing box. At a Chase Bank I also have a SDB and they moved the entire bank and basically all of the above was also explained to me the same as the BOS mess.
So far by me I've never had a problem nor have heard of a problem with a SDB being opened, robbed, taken over by the government or anything else. I guess it may have happened somewhere, but not that I've heard of around me. We don't have earthquakes, seldom any large tornados, no huricanes, no brush fires, no mud slides, no super high winds, etc. Sure is boring around here.

I've lived in San Diego my whole life. Biggest earthquake I have ever felt lasted like 7 seconds and wasn't that bad. 90% of the time people say there was a quake, I never felt it. And I've been around the last 2 huge fires but they never got anywhere near me. I just got a neighborhood full of ashes and had to stay inside... However the midwest scares me with the storms and tornadoes and floods. Never been over there but it looks insane. I feel like we don't have much to deal with here in SD.