An agreement between a supplying form and an owner to replace a stolen or lost financial instrument is called a lost instrument bond. Part of the agreement guarantees the bond or the stockholder that the issuing party replaces the financial instrument. When an organization or an individual loses a savings bank book, a stock certificate, certified check, promissory note, or a document of similar value due to misplacement or theft, the issue will not hand in the copy until the owner provides a lost instrument bond. Once the duplicate document is presented, and the original document is found, it has to be handed to the surety company as a requirement by the bond.
Organizations issue Commercial Lost Instrument Bond Services for a 1-year term which is later on renewed for several years. For professional lenders, the premium stands at 1% of the bond amount, and for all the other applications, the premium is at 2% of the bond amount. Ideally, there are two general types of lost instrument bonds:
Open Penalty Bonds and Fixed Penalty Bonds
Open penalty bonds are needed for the lost items whose market value fluctuates like the stock certificates. And fixed penalty bonds are needed for items that have a fixed value like certificates of deposits and certified checks. When you are looking for a surety bonds provider, you need to look for one that offers an easy and quick process of getting lost instrument bonds without a lot of trouble. The company needs to have a good team of knowledgeable personnel in lost securities bonds, and still offer good rates on all surety bonds. The company also needs to assist the client to understand their appeal bonds responsibilities and rights and provide them with accurate and fast service.
Why Do I Need to Have a Lost Instrument Bond?
This bond is used to protect the financial body that issues the instrument, against the cashing of the instrument several times. When an instrument is stolen or lost, and the institution needs to issue a duplicate, a bond is required to ensure that the amount on the instrument will not be paid more than once. And this is even after returning the original one.
What Are the Benefits of The Obligee?
When someone fraudulently redeems a lost instrument, a lost instrument bond protects the institution. In this case, if the right owner claims to own the asset, the institution can go ahead and claim on the bond from the surety to recoup their loss. Afterward, the party that is not the right owner will have to reimburse the surety for the sum paid on the claim.
Why Does A Lost Instrument Bond Need Security?
For you to obtain a lost instrument bond, you must submit a statement in detail. This statement is will need to require the loss of the instrument, the circumstances that led to its loss, and the date the instrument was lost. The instrument needs to have been lost for a minimum period of thirty days before receiving the bond.