Declaration Of Loss For Cashier's Checks

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Question:

I have a question concerning declarations of loss for cashiers' checks. If the customer comes in to report the check lost or stolen before 90 days after issue will a standard indemnity bond be enough or do we need a bond in the amount of the cashiers check in order to reissue the check?

Answer:

Whatever you do instead of following the statutory procedure is up to you; i.e., it is a policy decision.

You might require an indemnification agreement. That is a simple contract where the remitter agrees to make the bank whole if the first check ever shows up. The value of the contract depends on the consumer's ability and willingness to repay you at that time.

Alternatively, you might require an indemnification bond. That is a contract between the customer and an insurance company where the bank is the third party beneficiary. If the check shows up the insurance company agrees to make the bank whole.

I recommend you follow the statutory procedure. There are a number of Bankers Threads on this topic.

First published on BankersOnline.com 3/10/03