surety bonds and error & omissions insurance, and more

Your home state decides if it wants its notaries to be bonded or not.  If a bond is required, your state determines the bond amount, as well as the cost to be paid by notaries.  If, for personal reasons, you find that you aren't able to secure a bond, a licensed insurance agent can talk with you about options, if available.  The start and end dates for the bond should mirror the same dates of your notary commission.  If your commission lasts four years, the bond should also last four years.  When it's time for you to renew your notary commission, it will also be time for you to purchase a new bond.

Contrary to popular belief, the Notary Bond is NOT insurance.  It's more like a guarantee or promise.  The National Notary Association, the nation's largest association for notaries, explains it perfectly in Twelve Steps to a Flawless Notarization:  "The bond protects the public against the Notary's misconduct in the event the Notary has no funds to reimbursed a damaged victim. Under law, any funds paid out to a victim by the bonding company must be repaid by the Notary. - pg. 52".

E & O is a type of professional liability insurance.  In most states, E & O insurance is optional.  It is left up to the notary to decide whether to purchase insurance, how much to purchase, and the type of coverage, up to the limits outlined in the policy.

Unless a notary completes formal notary training, he/she may not be aware of an important fact that is stressed repeatedly in Peter J. Van Alstyne's Notary Public Encyclopedia:  "The notary is personally liable for all damages proximately caused by her misconduct and negligence. There is no limit to the amount for damages the notary could be liable. The scope of the notary's liability is unlimited"- page 360".

In the absence of E & O insurance, the notary will have to hire an attorney or represent herself in court, pay for court fees and  investigation fees.  If the court rules against the notary, she will also be responsible for the settlement of any claims.  

Associations like the National Notary Association, and Indiana Notary Association suggest that notaries should consider purchasing a policy with a limit of at least a $25,000.  While that's a good start and it's better than nothing, The Bond Lady recommends a higher policy limit especially since an E & O policy covers the settlement of any claims, cost of the investigation, court fees, and attorney fees.

Notary Signing Agents are specially trained, professional notaries who are hired to do more than notarize signatures.  The documents that they handle are typically for transactions involving real property/real estate. These additional responsibilities equate to additional risk which is why it is recommended that NSA's purchase both Notary E&O and Notary Signing Agent E&O. A policy typically covers missed signatures, documents lost in shipping, printing errors; mistakes caused by the signing agent which led to the loan not closing, or requiring a title officer to hire a different signing agent.   Similar to Notary E & O insurance, the settlement of any claims, cost of the investigation, court fees, and attorney fees would be covered, up to the limits outlined in the policy.

If companies that employ three (3) or more notaries should consider purchasing a Group (Blanket) E & O policy instead of separate policies for each notary.  Group policies are more cost effective and easier to manage. Ask The Bond Lady to explain how a group policy differs from an individual one.

Professionals like Mobile/Traveling Notaries, and Notary Signing Agents should take heed.  Even though you may have purchased E & O insurance  you may not have covered all of the risks.  Have you upgraded your auto insurance policy to recognize it is used for business purposes?  What if you accidentally damage someone's property while you are at their home?  Do customers come to your home office?  If so, what happens if they trip and fall?  A resentful competitor accuses of you slander or libel and wants to sue you - are you insured for that?

Employer-sponsored notaries should talk to their supervisor about notary  liability. Since it is the notary who is personally liable for all damages, you'll want to be 100% certain that the company's insurance outlines it will protect you when notarizing signatures at work for the company and its employees.  Don't just assume that it will. 

There is not cookie-cutter approach to selecting the right type and amount of liability insurance.  Every notary's situation is different.  The best decision a notary can make is to have a conversation with a licensed insurance agent who specializes in this type risk.

Below are just of a few of the surety bonds and insurance policies offered. If you desire something different, or at a lower or higher amount, just ask.  Buyers Remorse? Did you just pay for something you don't want anymore? No problem. Call or send an email The Bond Lady will be happy to refund your money in full.  Surprised? Don't be. It's called good customer service.