Throughout America there are nearly four million Notaries that have taken their oaths with great dignity. Handed the responsibility of their stamps and seals as tools to be used with integrity and care.
Because of this, notaries are viewed as incredibly trustworthy members of society, professionals we rely on to handle our most delicate, secret documents.
Notaries handle countless records throughout their daily duties, records that are of the upmost importance, like wills, power of attorney, mortgages, deeds, and more. No matter how gifted, talented, discreet, or conscious a single notary may be, the reality remains – notaries could possibly make mistakes.
This begs questions – how does a notary take care of correcting their mistake? How does a notary plan to protect themselves from the damages that they might cause, like legal expenses, lawsuits, and defamation?
The answer can be found in Liability insurance, specifically for Notary Publics.
Through insurance options like Notary Bonds and Errors & Omissions, notary publics, like yourself, can correct mistakes, solve problems, and avoid treacherous and expensive lawsuits. It’s important to understand the difference between the two, understand which you might need, and determine, if both, should be included in your notary plans.
What is a Notary Bond?
Think of a notary surety bond as you would a line of credit. A notary bond comes from a surety bond company, or an insurance company, and is set up to cover the notary client. So, if a customer files a claim against a notary who has a notary bond, the surety bond or insurance company is obligated to pay the customer the amount requested and allowed under the specific bond terms.
This type of bond is intended to protect the client from harm’s way if a mistake (or an allegation of a mistake) arises, and not necessarily the notary. This notary bond is kept on file by the Notary’s licensing authority to keep them in line and ensure the public that the notary considering working with is professional and properly licensed.
This is a vital factor in your notary public career and although it’s not entirely dedicated toward protecting you, the notary, it’s crucial to guarantee your clients that you’ve been approved by the state to do your job well.
How Do You Get a Notary Surety Bond?
Check in with you state licensed surety bond agency or insurance company to assist you with your notary surety bond paperwork. Most of the time, this is a simple application.
Depending on your state, the information required will vary.
Most states will require basic information including your name and contact information, but others might also require things like the bond amount needed, the effective date of the bond, the type of bond you need, your social security numbers, the years of your notary experience, and more.
The first step is to find a reputable, state licensed Surety Bond Agency (or Insurance Company) that can assist you with finding which type of bond and will require you to complete a simple application. Again, this varies from state-to-state, so the information required is subject to change.
It’s important to remember that your notary surety bond will be valid for the same amount of time as your notary commission,
Cost of Surety Bonds
The cost of surety bonds will also vary from state to state, but in general, a notary surety bond can cost anywhere from $5,000-$15,000, mostly based on the length of time the bond will last. Typically, a notary will pay just a fraction of what the bond is worth, such as $50-$100, but this depends on the agency.
Once a bond is cashed out though, you’ll be responsible to reimburse the surety organization. The bond is also voided once it’s been used, so if you do plan to use your bond, you’ll need to buy a replacement bond to get your coverage back.
Notary Errors and Omissions (E&O) Insurance
Notary Errors and Omissions (E&O) is a special type of liability insurance that’s vital for notary publics, though, not entirely specific to the industry (E&O is common in several business professions where a small error could potentially be detrimental). E&O helps with legitimate mistakes, but also covers accusations of mistakes, too.
Notary E&O can be used when notaries make errors that could cause harm, are named in lawsuits, violate the law while they’re notarizing, or have their signatures forced on documents.
This type of insurance protects the notary from customer claims that result in an unintentional mistake, and it covers up to the chosen policy limit. Unfortunately, notaries who do not have this type of coverage are still held financially responsible for the damages they have caused, even if they’re just allegations of damages.
E&O insurance pays for a professional lawyer with specific expertise, and it can be used to cover court costs, damages awarded, legal fees, and more, up to the policy limit.
How Do You Get E&O Insurance?
This type of insurance is available from insurance carriers who offer commercial policies. You will likely need to fill out an application that requires information about your clients, your processes, your previous claims, and any risks associated with your business.
It’s best for you if you explain to the insurance agency the discretion and care you use in your profession. The wiser you are with your career, the more careful you are with your responsibilities, and the more conscientious you are, the better of a position you’re in for an E&O claim.
How much Notary E&O Insurance Is Needed?
A standard amount of notary insurance (E&O) is about $25,000, but in the end, it’s up to, as the notary, to decide which amount makes the most sense for your coverage. Consider buying a plan that covers the amount of your surety bond plus a few extra expenses that might arise.
Cost of Notary E&O Insurance
Notary E&O costs will vary based on several factors, however, median premiums are typically around $700.
What Is the Difference Between Notary Surety Bond and E&O Insurance?
The main differences between these two types of protections are surety bonds are often required by the state whereas E&O insurance is an extra layer of protection you elect yourself. While E&O protects the notary, surety bonds typically protect the public.
When your surety bond is paid out, you’ll be left having to reimburse the surety agency and replace your bond, but E&O works a bit differently – instead, with E&O, you’ll pay your premium due and the insurance carrier will cover the claim-generated expenses up to your limit. You are not obligated to repay for losses or buy an addition policy to replace your old one.
Our Final Thoughts
You can, ultimately, never have enough protection when you’re working for the public. Because of the nature of your career, you’ll need to ensure that you’re gifting yourself with several different layers of protection. By purchasing both a surety bond and Notary E&O Insurance, you can provide yourself with the dual security needed to best protect you, your clients, and your career.
References:
National Notary Association (2018), [Online]:
https://www.nationalnotary.org/