Why Notaries Need E&O Insurance

While becoming a notary is relatively easy in most states, notarizations are a big deal. Often there is no exam and only a little training involved, but that doesn’t diminish the role notaries play in executing critical legal documents. The notarial ceremony deters fraud by confirming the signer’s identity and reinforcing the integrity of business and legal transactions. 

As an impartial witness to the signing of important documents, notaries help people buy homes, transfer assets to friends and family, start or buy businesses, execute end-of-life plans, and more. 

Although Notary fees are nominal (ranging from $5-$25 per notarization), the impact of the services provided can have far-reaching legal consequences for all parties involved. So how do notaries protect themselves if they make a mistake?

Notaries can be sued

Notaries can be sued for thousands of dollars or more if they are deemed liable for the financial loss due to negligence or fraudulence. 

The consequences of improper notary services can extend beyond financial harm as well. A mother is suing one Florida notary for an illegal notarization. Despite instructions to notarize documents for obtaining a passport for their minor son with both parents present, the notary conducted the notarization at the sole request of his father, who kidnapped and took the child to Lebanon. 

Without the notary, the father wouldn’t have been able to obtain a passport fraudulently, and without the passport, he would have never been able to flee the country with the child. Eventually, the child was found and returned to his mother. 

Now, both the notary and the UPS store offering the service are being held liable. The mother is seeking damages for tens of thousands of dollars, but the jury could decide to award her more or less if she wins. 

Whether mistakes happen due to carelessness or intentional fraud, notaries face significant financial consequences for missteps that lead to any kind of financial or personal harm.

The Difference between a Notary Surety Bond and E&O Insurance 

Notaries are often required to purchase a surety bond before they are allowed to notarize documents. A Notary Surety Bond protects the public financially from any negligence or intentional misconduct. 

States like Florida require every traditional notary to purchase a $7,500 Surety Bond. Alabama requires a $25,000 Surety Bond, Arizona requires $5,000, and some states like Ohio and Georgia ask for no Surety Bond at all. 

Unlike an insurance policy, if the surety bond company pays out any claims, the principal (or notary in this case) is obligated to reimburse the money. 

On the other hand, Notary Errors and Omissions Insurance or E&O Insurance protects the notary if a civil or criminal claim is filed against them. 

The E&O insurance pays your claim and legal expenses up to your policy limit, so you don’t ever have to pay a deductible, and you don’t have to pay it back.

Notaries commissioned in more than one state only need one E&O policy to cover all their notarizations but may be required to carry one or more surety bonds depending on the states’ regulations.

Why Notaries Need E&O Insurance 

While E&O insurance isn’t required, there are compelling benefits of having this coverage throughout the length of your commission term. 

These E&O policies will cover expenses up to the policy amount related to: 

• Legal fees and court costs 
• Legal defense by an expert in notary law
• Another party counterfeiting your commission information and forging your signature 
• Unintentional violations of notary law
• Financial damages due to an error or omission
• Defense against frivolous lawsuits 

Without this coverage, notaries must finance their defense without any help. Since a notary public’s average salary ranges from $25,000-55,000 a year, this could be a particularly burdensome financial undertaking. E&O insurance is worth the relatively small upfront costs and peace of mind it provides. 

Surety Bonds and E&O Insurance for Electronic and Remote Notaries

More than half of all states have approved the use of electronic and remote notarization. With this new technology comes new opportunities for notaries to expand their businesses and offer their services to more customers worldwide. Consequently, it also means additional circumstances for mistakes. 

In Florida, notaries must increase their surety bond of $7,500 to $25,000 before they can be approved to do remote online notarization (RON). 

Most other states don’t require an increase in surety bond coverage or E&O insurance to perform remote online notarizations. Still, cautious notaries should consider getting an E&O policy to protect their personal and professional assets if a mistake occurs. 

Even if a notary makes no mistake, he or she may become the target of an unwarranted claim by a disgruntled or litigious client, which costs money to settle. Without E&O insurance, the cost of doing business could cost you more than you make.