Area of Law: Insurance Law
Answer # 2796
Lost Document BondsRegion: Ontario Answer # 2796
What are Lost Document Bonds?
Lost Document Bonds are also known as Lost Securities Bonds or Lost Instrument Bonds. They are required by private businesses, banks and other financial institutions when a person or corporation has accidentally misplaced, lost or destroyed an original document that proves ownership.
What types of documents can be covered under a Lost Document Bond?
Examples of lost documents include:
- Certificated cheques
- Life insurance policies
- Stock certificates
- Bank Drafts
- Common or preferred stocks
- Federal, provincial, municipal or corporate bonds
- Lost savings bonds
- Lost document certified cheques
How does a Lost Document Bond work?
When a document is lost, before issuing a replacement, financial institutions may require legal protection should the original and replacement still exist, in order to avoid the possibility of both being cashed, known as Double Redemption, either by accident or fraudulently. This legal protection is provided through a Lost Document Bond.
A Lost Instrument Bond provides assurance that the issuer of the replacement security will be legally protected from economic loss should the lost document turn up later.
A Lost Securities Bond allows the issuing corporation or entity to provide a replacement certificate with the documents and piece-of-mind that they are legally protected from loss.
Types of Lost Document Bonds
There are two types of Lost Document Bonds:
- Open Penalty: used for replacement certificates of fluctuating value such as common shares.
- Fixed Penalty: used for replacement certificates of fixed value such as corporate debentures.
For more information about Lost Document Bonds, or to purchase a bond, contact Ai Surety Bonding.
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