How to Get a Lost Instrument Bond

If you have lost or misplaced an important financial document such as a promissory note or corporate stock certificate, your bank / brokerage / transfer agent may require you to obtain a lost instrument bond before issuing the replacement. A lost instrument bond is a type of Surety bond in California. It guarantees that if the lost financial document is found in the future, the financial institution will not be liable for honoring it.

How to Obtain a Lost Instrument Bond

When a person requests their bank to issue a duplicate certificate after losing an important financial document, the financial institution requires them to do two things:

1. Get an affidavit and sign it in the presence of a notary public. The affidavit should certify the loss. The Principal, that is the document owner, should agree to indemnify the Obligee for any loss.

2. Purchase a lost instrument Surety bond

The Obligee will tell you what type and amount of bond is required. All states have laws governing Surety bonds. The state of California requires anyone requesting replacement of a lost redeemable instrument in the state to get a lost instrument Surety bond first.

Usually, a lost instrument Surety bond can only be obtained if the financial instrument has been lost for at least 30 days. Therefore, to obtain a bond, submit an application to the Surety company of your choice. Your Surety will need your financial information in order to determine if you are eligible. Explain the circumstances surrounding the loss. When writing an application to a Surety company, remember to mention the date that the instrument was lost. Finally, after the Surety reviews your application, they will issue the bond upon qualification being met.

Lost Instrument Surety Bond Premiums

Surety bond premium is based on the amount of the bond and can vary depending on the bond company and the applicant’s credit worthiness. Many Surety companies charge a set percentage of the value of the lost instrument as premium; others charge a flat fee for bonds up to a certain amount, with incremental increases for more valuable instruments. For example, if your bond is $5,000 or less, the Surety may charge a flat fee of $100, with an additional $20-$40 for every increase of $1,000.

Do Lost Instrument Bonds Need to be Renewed?

Although bonds are usually issued for a year, the Obligee may want you to get coverage for a longer period if they have reasons to believe that the lost instrument may reappear one or more years after going missing. If the Obligee requests a longer term, you may have to renew your bond every year. Every time you apply for renewal of your bond, the Surety company will conduct a fresh credit check and re-calculate your bond premium based on their analysis. This is for both your protection and the protection of the Surety.

H.M. Vreeland is a leading Surety bond company serving California. Our unparalleled ability to understand our clients’ bonding needs and develop customized solutions to meet them sets us apart from other California Surety companies. To make an appointment, call (415) 566-3401.