Notary Bond (Surety)

Understanding Your Notary Bond (Surety) & Errors and Omissions Insurance
ASN Hot Tip August 2008-#1

The Situation:  We received a call from a notary who was concerned that she may be sued as a result of an incorrectly performed notarial act.

The Notary’s Dilemma:  She was afraid that her state-required notary bond would not cover her legal expenses and any judgment against her.

The Solution:  Many states require that a notary public be bonded throughout the term of his or her commission. Obtaining the surety bond is a part of the application or renewal process. Although the surety bond is similar to an insurance product, it does not protect the notary. The bond is meant to compensate others who have suffered a loss due to an improper notarial act having been performed by a notary. The notary cannot make a claim against the bond for herself.

When a bond company issues a bond to a notary, it is saying, “We warrant that Jane Doe Notary will perform her duties in accordance with the law. If she does not and there is a loss, we will pay the victim for that loss up to the limits of the bond.” Bond limits are determined by state law and therefore vary by state. Limits range from a low of $500 to a high of $15,000. If the bond agent has to pay out all or a part of the notary’s bond, the notary will be required to repay the bond agent the amount of the expended portion of the bond.

What can the notary do to limit the impact of a lawsuit resulting from an honest mistake? The answer lies in obtaining an errors and omissions (E&O) insurance policy. This insurance is widely available and very affordable for the limits of protection it provides.

Errors and omissions insurance covers a notary policy holder who may be sued by someone who believes that an improperly performed notarial act by the policy holder caused that person to suffer a monetary loss or denial of some benefit.

What coverage limits should a notary carry on an E&O policy? We suggest you consider the monetary value of the transactions you generally preside over, and shop accordingly. Notaries who preside over transactions valued in the hundreds of thousands of dollars (the average home loan closing), for example, purchase coverage more in sync with these dollar amounts.

Remember, too, that E&O insurance designed specifically for notary signing agents is now available in addition to standard E&O coverage. (For more information on signing agent E&O coverage, please visit www.signingagentinsurance.com or http://signingagent.cnasurety.com).

If you are commissioned in a state that requires a bond, then your surety bond agent is your most likely resource for E&O insurance. Otherwise, a simple web search will yield a number of resources for this valuable coverage.

Questions, comments on this Hot Tip?  Email support@asnnotary.org

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