We spend a good deal of time at the beginning of the school year learning how to be responsible for items we borrow from the library. I encourage students to prevent loss and damage by keeping library books in a designated “safe place”. Here's the good news: very few library books actually 'poof!' disappear-- most are hiding in plain sight at home (under the bed, mixed in with personal books on the bookshelf, forgotten in an old backpack, left at the babysitter's house, etc.) Some do get returned to a JMRL library. They send them to me periodically throughout the year. So lost books aren’t of any immediate concern. At the end of each school year, students are asked to search for any books that they have not returned.
For damage caused by liquid (bathwater, rain, a leaky juicebox in the backpack, etc.), most books need to be discarded. The pages wrinkle as they dry and unhealthy mildew grows on the paper. While I cannot accept money to replace damaged books, I can accept replacement copies if parents are interested in replacing the book.