What is an Affidavit of Loss?

An affidavit of loss is a legal document in which someone states that an original document of some form has been lost. Affidavits of loss can be filed for a number of things including identifications such as passports, certificates of title for homes and vehicle, and certificates indicating ownership of securities. In the financial world, people are usually referring to an affidavit of loss which documents the loss of a security when they use this term.

When people purchase securities such as stocks and bonds, they are issued certificates which confirm their ownership status. These documents must be held in a safe place because they provide proof of ownership, which may be important in the future. Some people keep them in safe deposit boxes, have them stored at a brokerage, or store them at home in a secure location such as a home safe.

However, losses do occur. People may lose such documents as a result of floods or fires which cause damage as well as thefts or other events. As soon as someone recognizes that a security is missing, an affidavit of loss should be filed. This written document describes the security in question, providing as much supporting documentation as possible. It also verifies the identity of the owner and provides a description of the situation which led to the loss.

Documents such as a copy of a police report or a copy made of a security can be attached to a loss report to provide documentation. When the affidavit is received and processed, a new copy of the security will be issued. It may have markings which indicate that it is a replacement for a lost or stolen security. Should the original turn up at some point in the future, it needs to be forwarded to the issuer for destruction, with a document explaining that it was thought lost and later recovered.

If someone fails to file an affidavit of loss and the original is still floating around, as might be the case if it is stolen, someone who has the original may attempt to prove ownership. The original owner can contest such claims by showing the affidavit of loss and supporting documentation, but if this is not available, it may be difficult to retrieve the original or to prove ownership. Some companies provide blank affidavits of loss which people can fill out, and a lawyer can also prepare such a document.