We all make mistakes, due to fatigue, distraction and being over-worked. Unfortunately, when you make a mistake as a notary, you are dealing with important and sensitive documents. Even an unintentional error can cost you a lot of money. You don't want to put your personal or business assets at risk, which is why notary insurance may be a smart investment.
2 Coverages All Notaries Need
- Notary errors and omissions insurance: Protects you from unintentional and unknowing acts that can lead to lawsuits
- A notary public surety bond: Enables you to pay a judgment, settlement or claim against you if you do not have the financial ability to do so.
What Is Notary Insurance?
Notary insurance primarily consists of an errors and omissions policy that protects you if a client experiences a loss or injury due to your negligence, misinformation or other errors.
Additionally, there are other business coverage types you may want to include in your insurance portfolio. These include:
- General liability insurance: This is a basic liability policy that nearly every business should maintain to protect against a wide range of potential liability claims.
- Commercial vehicle insurance: If you travel by car to do your notary work, you may want to cover your vehicle, as it may not be covered by your personal auto policy when you use it for commercial purposes.
- Notary public surety bonds: In most states you will be required to hold a notary public surety bond in order to perform notary work. While these are not technically insurance policies, many insurance companies offer notary bonds you can purchase.
What Is Notary Error and Omissions Insurance?
The key component of your asset protection and risk management coverage is errors and omissions coverage, sometimes called an E&O policy. This protects you if you notarize a document improperly and unintentionally. This policy does not protect a notary who intentionally notarizes paperwork incorrectly, nor will it cover any liability issues outside of your notary practice.
The provides the following protection if a claim is filed against you:
- Provides for expert legal defense from insurance company attorneys
- Covers court costs and attorneys fees
- Pays claims if you are found at fault, up to the policy limit
- Deters people from filing false claims against you
There are three kinds of errors and omissions coverage that you want to be aware of:
- Regular notary E&O insurance: Covers up to $100,000
- High-limit notary E&O insurance: Covers up to $2 million
- Signing agent E&O insurance: Covers "gaps" in traditional notary E&O insurance
Keep in mind a notary errors and omissions insurance policy is a must-have coverage if you are a notary. According to state laws, the notary public has unlimited financial liability if he or she causes the public harm as a result of an error or omission.
What Gaps Does Signing Agent E&O Cover?
Many traditional notary only cover the actual notarizations in a loan package. Signing agent E&O policies would also cover additional mistakes, such as:
- Overlooked initials or unnotarized signatures
- Improperly dating the Right of Rescission
- Erroneous corrections made to documents
- Returning time-sensitive documents late
- Not completing the document signing on time
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What Is a Notary Public Surety Bond?
Most states require notaries to carry a notary bond while in office. A notary bond is a surety bond issued by a state licensed company that protects the public if the notary makes a mistake that causes financial damage to the public.
Unlike E&O insurance, this bond covers intentional acts by the notary, as well as unintentional acts. Normally the bond is between $500 and $15,000. This is not an insurance policy. If the notary has to pay a claim and the bond is used, the money will have to be reimbursed by the notary, as required by law.
Damages can exceed the amount of the bond. If this is the case, the damages may or may not be coved by errors and omissions insurance depending on the intent of the notary who committed the error.
Get Quotes on Notary Insurance
As a notary public you know the risks of notarizing important and sensitive documents, and most likely you take utmost care to make sure the paperwork is done correctly. And yet, sometimes mistakes can still happen.
Don't let one honest mistake damage your business and personal finances. The right insurance can put your mind at ease.
FAQs
Even if you already have a notary surety bond, errors and omissions (E&O) insurance is different. While a surety bond protects the public from the notary's mistakes, E&O insurance coverage protects notaries from liability if they commit a negligent act or make an error or omission while performing notarial duties.
What is the difference between errors and omissions insurance and bonds? ›
Bonds and E&O insurance are both important for notaries. The main difference is that bonds help protect the public, while E&O insurance helps protect you. Bonds guarantee that your clients will get their money back if you make a mistake. On the other hand, E&O insurance helps cover you as a notary.
How much E&O insurance does a notary need in Texas? ›
Errors and Omissions Insurance helps protect you, the notary public, for cases of honest mistakes and/or omissions. We recommend a minimum of $10,000 E&O coverage for those performing general notarial work, and $100,000 E&O coverage for notaries working as professional notary signing agents.
What is the difference between insurance and surety bond? ›
A key difference between bonds and insurance is that insurance protects your business in the event that you are accused of a wrong whereas a surety bond protects your client's business if you do something wrong.
What is the difference between a surety bond and a certificate of insurance? ›
Surety bonds protect an obligee (hiring party) against a contractor's (principal's) failure to perform. Insurance policies protect an insured (contractor) from liabilities on their job (also protecting the hiring party by eliminating the possibility of downstream financial risk making its way to them).
What is not covered by E&O insurance? ›
E&O insurance doesn't cover claims for property damage, bodily injury, workplace injuries, data breaches, intellectual property violations, or criminal acts such as fraud.
Why is E&O insurance so expensive? ›
Location, especially if you're in a state with higher minimum coverage requirements. Claims loss history, because you can expect to pay higher E&O insurance rates if you have a history of lawsuits. Coverage limits, because policies with a higher limit are likely to cost more than policies with lower coverage limits.
Is errors and omissions insurance worth it? ›
Why Do I Need Errors & Omissions Insurance? As a business owner, you can face a lawsuit at any time. That's why you'll want errors and omissions coverage. This will help pay your legal fees if you're sued for mistakes or errors in your services.
Do I need a bond to be a notary in Texas? ›
The state of Texas requires every Notary to purchase a $10,000 Surety Bond in order to protect the public financially from the possibility of a negligent mistake or intentional misconduct.
Does E&O insurance cover lawsuits? ›
Errors and omissions coverage can help pay for: Damages, including any judgments and settlements that result from the lawsuit. Court costs, which can include legal defense costs, attorney fees and other court-related expenses. Disciplinary proceedings called by a regulatory, licensing or other government agency.
Errors and omissions insurance (E&O), also known as professional liability insurance, often includes two types of policy limits. The aggregate limit is the total amount your provider will cover for the policy term (usually one year). The per occurrence limit is the amount your provider will cover in a single claim.
What is another name for E&O insurance? ›
Many industries use the terms “errors and omissions (E&O) insurance” and “professional liability insurance” interchangeably. You may also hear these policies called “malpractice insurance.” Common industry names for this policy include: Professional liability insurance for architects, accountants, and consultants.
Is E&O considered professional liability? ›
Professional Liability insurance, also known as Errors and Omissions (E&O) coverage, is designed to protect your business against claims that professional advice or services you provided caused a customer financial harm due to actual or alleged mistakes or a failure to perform a service.
What is the difference between security and surety bond? ›
Surety versus security
The difference between the words 'surety' and 'security' in the context of bail applications is quite simple: A 'surety', also known as a bail guarantor (and sometimes referred to as an 'acceptable person') is someone who guarantees bail for a person who applies for bail, by providing a security.
Is E&O insurance the same as general liability? ›
They offer different scopes of protection.
General liability lives up to its name – it's generalized liability coverage for lawsuits, property damage, and advertising injuries. E&O only covers lawsuits over the financial losses someone experienced because of your work.
