Notary Bonds and Notary Errors and Omissions Insurance April 8, 2023 / Notary Association of America
Most states require that an individual applying to become a notary purchase a surety bond. A notary surety bond is the notary's promise to uphold the notarial law. It protects the individual who may be harmed by the notary's negligent act, whether intentional or by mistake. The notary bond does not protect the notary. If there is a claim against the notary, then he or she is responsible for the financial repercussions up to the bond amount which can range from $1,000 to $25,000. The notary will also be responsible for any legal fees associated with their negligent act. Of course, if the notary cannot pay, then the surety company steps in and pays the claim but will then seek reimbursement of all losses, costs and expenses from the notary.
That's why it is important for notaries to purchase notary errors and omissions insurance. This is professional liability insurance designed with the notary in mind that will protect in the event that a notarial act is in question and must be settled legally. While the notary bond protects the public, errors and omissions insurance protects the notary from liability. It provides protection in the event the notary commits a negligent act or makes an error while performing acts as a notary. If this act causes a loss to the public and the notary must legally pay for the loss, then errors and omissions insurance steps to cover the loss including any legal fees, thus protecting the notary.
Errors and Omissions Insurance can be purchased at https://supplies.notaries.com/collections/insurance
A notary often kept her notary seal and journal in her car for convenience. However, one day the notary returned to her vehicle to ﬁnd someone had broken in and stolen, among other things, her notary seal and journal. The person that stole her stamp from her car used it to transfer real estate into his name. He then reﬁnanced the properties to cash out on any equity. The crook forged the signatures of his victims, including the notary's name and applied her seal. She was exposed to liability because the injured parties alleged that she did not safeguard her seal in a secure place, as required by law.
A notary was hired by a mortgage broker to notarize documents for an individual reﬁnancing a mortgage. The notary arrived at the residence of the homeowner and notarized the necessary documents. A year passed, and the notary was served with a lawsuit from the homeowner alleging the notary was part of a predatory lending scheme. Despite the notary's limited role, the lawsuit outlined the fraud perpetrated by the broker that hired the notary. Although the notary did not participate in the scheme, the notary had to hire an attorney to defend himself.
A local notary was called urgently to a hospital to notarize a power of attorney (POA) for an elderly woman. The notary spoke with the woman executing the POA and the relative that was receiving the powers that were being granted by the woman. As reported by the notary, both individuals “seemed nice” and nothing appeared out of the ordinary, so she notarized the POA. The notary was later sued by family members of the woman that executed the POA as it was alleged that the man that received the powers ended up abusing his powers and stealing from the elderly woman. The plaintiﬀs claimed the individual signing the POA was not competent and the notary was negligent for notarizing the document.
An individual notarized documents for his employer even though the documents were not actually signed in front of the notary. He was concerned that if he did not notarize the documents, he could lose his job. He was later sued, along with the employer, over fraudulent transactions involving those documents. It became apparent during the litigation that the notary's fears were justiﬁed as his employer admitted forging signatures of his victims and requesting the employee, the notary, to notarize them.
*Notary Claim Scenarios provided by Travelers Casualty and Surety Company of America and its property casualty affiliates. One Tower Square, Hartford, CT 06183