Lost instrument surety bonds, also known as lost instrument indemnity bonds or lost security bonds, are a type of surety bond used in Canada to provide financial protection to individuals or companies that have lost a financial instrument, such as a stock certificate, a bond, or a promissory note.
In Canada, when a financial instrument is lost or destroyed, it can be difficult or impossible to replace it without incurring significant costs and delays. In order to mitigate the financial risk of losing the instrument, the owner can purchase a lost instrument surety bond.
The lost instrument surety bond is a contract between the bond issuer (typically an insurance or bonding company) and the owner of the financial instrument. The bond provides a guarantee that if the original instrument is found and presented for payment, the bond issuer will reimburse the rightful owner for any losses incurred as a result of the duplicate payment.
The bond amount is usually equal to the value of the lost financial instrument, plus any potential interest or dividend payments that would have been earned if the original instrument had not been lost. The bond issuer may also require the owner to provide documentation and other evidence to support the claim that the instrument has been lost.
Lost instrument surety bonds are commonly used by individuals and companies in the financial industry, including stockbrokers, transfer agents, and custodians, to provide an additional layer of protection against the risk of lost or stolen financial instruments. There are several different types of lost instrument in which a bond may be required in Canada, each designed to address specific types of financial instruments and situations.
Here are some of the most common types:
A certified cheque is a type of cheque that has been verified by a bank or financial institution as having sufficient funds to cover the amount of the cheque. When a cheque is certified, the funds are immediately set aside in the account to ensure that the cheque can be honored when presented for payment.
A share certificate is a document that serves as proof of ownership of shares in a corporation. When an individual or entity purchases shares in a company, they are typically issued a share certificate that includes the number of shares owned, the name of the shareholder, and other pertinent information.
A bank draft is a type of payment instrument that is guaranteed by a bank or financial institution. It is similar to a cashier’s cheque, in that it is a check drawn on the bank’s own account, rather than on the account of an individual or business. Bank drafts are typically used for large purchases, such as a down payment on a house or a car, and are often required for international transactions.
A lost instrument surety bond specialist is an expert in the field of surety bonding who specializes in lost instrument surety bonds. These specialists have extensive knowledge of the bond market, including the requirements and regulations surrounding lost instrument surety bonds, and can provide guidance and support to individuals and businesses seeking to obtain this type of bond.
A lost instrument surety bond specialist can help individuals and businesses navigate the complex process of obtaining a lost instrument surety bond, from identifying the specific bond requirements to completing the application process and obtaining the bond itself. They can also provide advice and support in the event that a lost instrument claim is filed, including assistance with the claims process and negotiating with the surety provider to ensure that the claim is handled in a timely and effective manner.
Some of the specific services that a lost instrument surety bond specialist may offer include:
A lost instrument surety bond specialist can provide guidance and advice to individuals and businesses seeking to obtain a lost instrument surety bond, helping them to understand the specific bond requirements and ensuring that they are well-prepared to meet these requirements.
A lost instrument surety bond specialist can assist with the application process, helping to complete and submit the necessary paperwork and documentation to ensure a smooth and efficient application process.
In the event of a lost instrument claim, a lost instrument surety bond specialist can provide guidance and support to the claimant, helping them to navigate the claims process and ensuring that the claim is handled in a timely and effective manner.
Overall, a lost instrument surety bond specialist can be a valuable resource for individuals and businesses seeking to obtain a lost instrument surety bond, providing expertise and support throughout the bonding process and helping to ensure that the bond is obtained and maintained in accordance with all applicable regulations and requirements.
Ai’s in-house Lost Instrument Bonding Expert
Dustin SanVido is the in-house bonding expert and as Sr. Commercial Lines Specialist in the Bonding division for Ai Surety Bonding, he works with companies and individuals across Canada and internationally to facilitate their regular and niche bonding needs. Whether commercial or private sector, Dustin’s specialties include Fiduciary, Contract, Transportation/Customs, and Finance.
It doesn’t matter if you need to learn a basic understanding of bonding or receive assistance in either simple or complex bonding needs – he can answer and facilitate them quickly with precision.
Dustin comes from a telecommunications and construction background, bringing an unmatched enthusiasm and workman-like attitude to every interaction. He resides in Toronto, Ontario with his girlfriend and pair of Boston Terrier siblings. He has a passion for fitness, football, film, and his family. Dustin is also currently studying at McMaster University for his professional industry designation via The Surety Association of Canada.
To apply for a lost instrument surety bond, you will typically need to follow these general steps:
Identify the type of lost instrument surety bond you need:
The first step in applying for a lost instrument surety bond is to determine the type of bond you need. As we discussed earlier, there are different types of lost instrument surety bonds, depending on the specific type of instrument that has been lost, such as a share certificate, bank draft, or certified cheque.
Find a surety bond provider:
Once you have identified the type of lost instrument surety bond you need, you will need to find a surety bond provider who can issue the bond. There are many companies that provide surety bonds, including insurance companies and surety bond brokers.
Provide information and documentation:
To apply for a lost instrument surety bond, you will typically need to provide information and documentation, such as the details of the lost instrument, the amount of the bond required, and your personal information. You may also need to provide additional documentation, such as proof of ownership of the lost instrument, to support your claim.
Pay the premium:
To obtain a lost instrument surety bond, you will need to pay a premium to the surety bond provider. The premium is typically a percentage of the bond amount, and it can vary depending on factors such as your creditworthiness and the specific type of bond you need.
Sign the bond agreement:
Once your application has been approved and you have paid the premium, you will need to sign the bond agreement. This agreement outlines the terms and conditions of the bond, including your obligations as the bondholder and the obligations of the surety bond provider.
It’s important to note that the application process for a lost instrument surety bond can vary depending on the specific circumstances of the loss and the requirements of the surety bond provider. Working closely with the provider and providing accurate and complete information can help to ensure a smooth application process and a successful bond issuance.
To cancel a lost instrument surety bond, you will typically need to follow these general steps:
Notify the surety bond provider: The first step in canceling a lost instrument surety bond is to notify the surety bond provider that you wish to cancel the bond. You should provide the provider with the reason for the cancellation and the effective date of the cancellation.
Provide documentation: In some cases, you may need to provide documentation to support your request for cancellation. For example, if the lost instrument has been found, you may need to provide proof of recovery.
Pay any cancellation fees: Depending on the terms of the bond agreement, you may be required to pay a cancellation fee to the surety bond provider. This fee can vary depending on the specific terms of the bond agreement.
Receive confirmation of cancellation: Once the cancellation has been processed, you should receive confirmation from the surety bond provider that the bond has been canceled. You should retain this confirmation for your records.
It’s important to note that the cancellation process for a lost instrument surety bond can vary depending on the specific terms of the bond agreement and the requirements of the surety bond provider. It’s important to review the terms of your bond agreement carefully and work closely with the provider to ensure that the cancellation is processed correctly and in a timely manner. Additionally, it’s important to consider the potential impact that canceling a lost instrument surety bond may have on your legal obligations and financial liability. In some cases, it may be necessary to obtain a replacement bond or take other steps to ensure that you remain in compliance with legal requirements.
The cost of a lost instrument surety bond in Canada can vary depending on several factors, including the type of bond, the bond amount, and the creditworthiness of the bond applicant. In general, the premium for a lost instrument surety bond is typically a percentage of the bond amount, and can range from 1% to 5% or more.
For example, let’s say that you need a lost certified cheque bond for $5,000. The premium for this bond may range from $50 to $250, depending on the surety bond provider and your creditworthiness. If you need a lost bank draft bond for $50,000, the premium may range from $500 to $2,500 or more.
It’s important to note that the cost of a lost instrument surety bond can vary significantly depending on the specific circumstances of the bond application. Factors such as the type of instrument that has been lost, the bond amount, and the creditworthiness of the applicant can all have an impact on the premium cost. Additionally, some surety bond providers may charge additional fees, such as application fees or cancellation fees. It’s important to review the terms of your bond agreement carefully and work closely with the surety bond provider to understand the total cost of the bond and any associated fees.
When a financial institution requests a lost instrument surety bond, they typically require certain terms to be included in the bond agreement to ensure that their interests are protected in the event of a lost or stolen financial instrument. Here are some common terms that may be requested:
Bond amount: The financial institution will specify the amount of the bond that is required, which is usually equal to the value of the lost financial instrument plus any associated fees or expenses.
Term of the bond: The financial institution may require that the bond be in effect for a specific period of time, such as one year, and may require that the bond be renewed annually or as needed.
Conditions for bond coverage: The financial institution may specify certain conditions that must be met in order for the bond coverage to take effect, such as notifying the institution within a specific timeframe of the loss or theft of the financial instrument.
Premiums and fees: The financial institution may require that the applicant pay a premium or fees in order to obtain the bond coverage, which is typically based on the bond amount and the level of risk associated with the transaction.
Indemnity agreement: The financial institution may require the applicant to sign an indemnity agreement, which is a legal agreement that requires the applicant to indemnify the financial institution for any losses or damages that may result from the loss or theft of the financial instrument.
Limitations on bond coverage: The financial institution may specify certain limitations on the bond coverage, such as exclusions for certain types of losses or damages, or limits on the amount of coverage that is available.
Overall, the terms of a lost instrument surety bond requested by a financial institution will depend on the specific circumstances of the transaction and the level of risk involved. It’s important for applicants to carefully review the terms of the bond agreement and to work closely with the surety provider and financial institution to ensure that all necessary requirements are met.
A lost certified cheque is a certified cheque that has been misplaced, lost, or stolen before it can be presented for payment. This can happen for a variety of reasons, including:
Misplacement: The cheque may have been misplaced or lost due to human error, such as being left in a different location than intended or misplaced during a move.
Theft: The cheque may have been stolen by someone with access to the cheque, such as a family member, friend, or employee.
Fraud: The cheque may have been fraudulently obtained by someone who has forged the signature of the account holder or the financial institution.
When a certified cheque is lost, the account holder or the person who is supposed to receive payment may be unable to access the funds until the cheque is located or replaced. This can be a significant inconvenience and can cause financial difficulties for the affected parties.
To mitigate the risk of lost certified cheques, it’s important to take appropriate precautions, such as keeping track of all cheques, storing them in a secure location, and notifying the bank or financial institution immediately if a cheque is lost or stolen. In some cases, a lost certified cheque may be covered by a lost instrument surety bond, which can provide financial protection for the account holder or payee in the event that the cheque is not found or cannot be replaced.
A lost bank draft is a bank draft that has been misplaced, lost, or stolen before it can be presented for payment. This can happen for a variety of reasons, including:
Misplacement: The bank draft may have been misplaced or lost due to human error, such as being left in a different location than intended or misplaced during a move.
Theft: The bank draft may have been stolen by someone with access to the draft, such as a family member, friend, or employee.
Fraud: The bank draft may have been fraudulently obtained by someone who has forged the signature of the account holder or the financial institution.
When a bank draft is lost, the purchaser or the person who is supposed to receive payment may be unable to access the funds until the draft is located or replaced. This can be a significant inconvenience and can cause financial difficulties for the affected parties.
To mitigate the risk of lost bank drafts, it’s important to take appropriate precautions, such as keeping track of all drafts, storing them in a secure location, and notifying the bank or financial institution immediately if a draft is lost or stolen. In some cases, a lost bank draft may be covered by a lost instrument surety bond, which can provide financial protection for the purchaser or payee in the event that the draft is not found or cannot be replaced.
A lost share certificate is a share certificate that has been misplaced, lost, or stolen. This can happen for a variety of reasons, including:
Misplacement: The share certificate may have been misplaced or lost due to human error, such as being left in a different location than intended or misplaced during a move.
Theft: The share certificate may have been stolen by someone with access to the certificate, such as a family member, friend, or employee.
Fraud: The share certificate may have been fraudulently obtained by someone who has forged the signature of the shareholder or otherwise obtained the certificate through illegal means.
When a share certificate is lost, the shareholder may be unable to prove ownership of the shares until the certificate is located or replaced. This can be a significant inconvenience and can cause financial difficulties for the shareholder.
To mitigate the risk of lost share certificates, it’s important to take appropriate precautions, such as keeping track of all share certificates, storing them in a secure location, and notifying the corporation immediately if a share certificate is lost or stolen. In some cases, a lost share certificate may be covered by a lost instrument surety bond, which can provide financial protection for the shareholder in the event that the certificate is not found or cannot be replaced. It’s important to note that the process for replacing a lost share certificate can vary depending on the corporation and the specific circumstances of the loss, so it’s important to work closely with the corporation to ensure that the process is followed correctly.
