Lost Instrument Bond Definition

When you lose a financial instrument, such as a check, and you request that the issuer replaces it, a mechanism must be in place to ensure the financial institution doesn’t lose money if the original check is found and deposited. That guarantee can come in the form of a lost instrument bond, a type of surety bond which can help an affected party seek legal recourse if it suffers financial damage because of replacing a lost financial instrument.

If you have lost an instrument and happen to find it later, you need to return it to the surety bonds company which issued your bond. If you fail to, a claim can be made against the bond, which means the surety will compensate the claimant and later seek reimbursement from you.

Lost instruments which may require that you post this type of bond include:

  • Cashier’s checks
  • Promissory notes
  • Real estate certificates
  • Deeds of trust
  • Life insurance policies
  • Corporate or municipal bonds
  • Other financial instruments

Lost Instrument Bond Cost

The cost of your lost instrument bond will be determined by the financial institution which issued your original instrument. Typically, it is 1.5 times the amount of the financial certificatе you lost.

Out of that, you pay a one-time premium based on the risk the surety undertakes by underwriting the bond. The typical premium is $20 for each $1,000 of the nominal cost of the financial certificate. If, for example, you lost a $10,000 promissory note, you will probably need to pay for a bond in order to have the note replaced.

Depending on the bond amount required, the surety may want to evaluate your credit report and financial statements before they give you an exact premium.

For sums of $5,000 or less, the cost of getting the bond is usually fixed at $100.

Types of Lost Instrument Bonds

There are two main types of these bonds which may be required:

Fixed penalty lost instrument bonds are required when the sum of the lost instrument is fixed, as is the case with checks or certificates of deposit.

Open penalty lost instrument bonds are required when the value of the lost instrument can fluctuate, as is the case with stock certificates.

Good to know

Once you receive a lost instrument bond, it’s a wise idea to make a copy of it and send the original bond form to the financial institution that requires it.

Lost instrument bonds are usually issued for one year only. If the financial institutions deems it necessary, however, they may require you to cover a longer period. This is why it’s imperative to notify the surety as soon as possible if a lost instrument turns up.

Apply for your lost instrument bond today!

The application for this bond is easy. After you submit our one-page application, we will contact you with a free quote on your bond. We will also let you know what documents we need in order to process and finalize your application.

You may be required to post personal or business financial statements. You may also have to provide a written statement explaining how the financial instrument got to be lost, stolen, or destroyed.

Still have questions about lost instrument bonds? Call us at 866.450.3412 and we’ll be glad to help.

About us:
Bryant Surety Bonds, Inc. is a surety bond agency based in Pennsylvania. Licensed in all 50 states and with access to over 20 T-listed, A-Rated bonding companies, we have the contacts, expertise, and top service to provide you with a hassle-free experience, all while offering competitive rates for your surety bond.