Answer:
Lost, stolen, or destroyed cashier's checks are governed by UCC 3-312. https://www.law.cornell.edu/ucc/3/3-312
It is up to each state to adopt UCC provisions into their own state law, and they could do so with revisions. Check your state code to see if this UCC provision was adopted verbatim. (It likely was. Most states adopt the UCC without revision, but look to make sure.)
Under UCC 3-312, a lost check claim is not enforceable for 90 days, period. During that time, no claim is enforceable, no matter what type of document is signed. That means if the item is presented for payment, it remains a valid check on the issuing bank.
Once 90 days are up, a "Declaration of Loss" is the document needed to enforce a claim. It is executed by a "declarer", who, in the case of a cashiers check, could be either the remitter or the payee.
If funds are needed sooner, the bank has two (well, really three) options.
1. Re-disburse the funds and take the chance that the original cashiers check will never be presented for payment in the next 90 days (lest you pay the funds twice); or
2. Obtain an Indemnity Bond. An indemnity bond is a type of insurance that makes the claimant (rather than the bank) responsible for the original check funds. They can be challenging and expensive to obtain, and the requirements for it would be up to the insurer.
3. I suspect you are instead referring to an "Indemnity Agreement". That is just a piece of paper from the claimant saying they won't hold the bank liable if the check is paid twice, but will instead take the liability on themselves (and repay the bank or any other holder in due course).
The interesting question here is whether or not the loan customer is the "remitter". Under UCC 3-103, I believe they are. They could execute the Indemnity Agreement, but know that the practical matter is that you are essentially extending them additional credit should the check clear twice.
Here is an oldy-but-goody thread on the matter. "Check" it out! https://www.bankersonline.com/forum/ubbthreads.php/topics/1424144/stop-o...
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