Bill sent a cashier's check through the mail, but it never arrived at the destination of the recipient. Under which bond can the cashier's check be replaced?

Bill sent a cashier's check through the mail, but it never arrived at the destination of the recipient. Under which bond can the cashier's check be replaced?

• A. Fiduciary bond
• B. Blue Sky bond
• C. Lost Instrument bond
• D. Payment bond

Answer: (C)

When a negotiable financial instrument like a cashier’s check is lost, the entity that issued the replacement needs protection against someone else presenting the original for payment. A Lost Instrument bond provides exactly that indemnity, safeguarding the issuer from duplicate claims or fraud if the original check later turns up or a dispute arises. Fiduciary bonds cover the duties of someone acting as a fiduciary, not the replacement of lost payments. Blue Sky bonds relate to securities regulation compliance. Payment bonds guarantee work performed on construction projects. None of these addresses replacing a missing negotiable instrument, so they don’t fit the scenario.

When a negotiable financial instrument like a cashier’s check is lost, the entity that issued the replacement needs protection against someone else presenting the original for payment. A Lost Instrument bond provides exactly that indemnity, safeguarding the issuer from duplicate claims or fraud if the original check later turns up or a dispute arises.

Fiduciary bonds cover the duties of someone acting as a fiduciary, not the replacement of lost payments. Blue Sky bonds relate to securities regulation compliance. Payment bonds guarantee work performed on construction projects. None of these addresses replacing a missing negotiable instrument, so they don’t fit the scenario.