Notary Errors and Omissions Insurance Demystified

In today’s litigious society, professionals, including notaries, are frequently subject to lawsuits. Dissatisfied clients may file claims alleging negligence or improper conduct. Even if unfounded, these lawsuits require substantial resources to defend against, making notary errors and omissions (E&O) insurance indispensable.

What is Notary Errors and Omissions Insurance?

A notary errors and omissions insurance policy is a type of professional insurance specifically designed to protect notaries public from financial loss resulting from claims of unintentional negligence or mistakes made in the course of their official duties. This insurance provides coverage up to the policy limits for legal defense costs, settlements, and judgments that may arise from such claims.

What Is the Difference Between a Notary Bond and Notary Errors and Omissions Insurance?

A notary bond is a type of surety bond that many states require notaries public to hold. This bond essentially guarantees to the public that the notary will perform their duties ethically and in accordance with the law. If a claim is made against the notary bond, the surety company pays the claimant up to the bond amount, and the notary is responsible for reimbursing the surety company for the amount paid out.

In contrast, if a claim is made against a notary's errors and omissions insurance policy, the notary does not have to repay the insurance company for the claims paid. The E&O insurance policy provides financial protection for the notary by covering legal defense costs, settlements, and judgments.

Examples of Claims Made Against Notary Errors and Omissions Insurance

Scenario 1: Forgery Allegations - A notary’s seal and signature were forged on a document. Despite the notary's insistence that they did not perform the notarization, the case required a substantial legal defense. Fortunately, the notary’s errors and omissions (E&O) insurance covered the legal defense costs, ensuring that the notary did not have to pay out of pocket.

Scenario 2: Missing Signature - A notary faced a lawsuit after a critical document she notarized was found to have a missing signature. The oversight caused significant financial loss for the client, leading to a lawsuit demanding thousands of dollars in damages. The E&O insurance covered the legal costs and the settlement.

Scenario 3: Fraudulent ID - A notary was implicated in a fraud case after notarizing a document for an individual using a fake ID. Despite her diligence, the fraudulent act went undetected. She faced a lawsuit for negligence, and her E&O insurance covered the legal defense costs.

Scenario 4: Incomplete Notarial Certificate - A notary failed to complete all required sections of the notarial certificate, which includes the date, notary's signature, and seal. This oversight resulted in an incomplete and invalid notarization. The client sued the notary for damages, and the E&O insurance covered the costs.

Exclusions in Notary Errors and Omissions (E&O) Coverage

Notaries must understand what an E&O policy does not cover in order to fully grasp the scope of their protection and be aware of situations that may require additional precautions. Here are some common exclusions in E&O insurance policies for notaries:

Intentional Misconduct and Fraud - E&O insurance does not cover claims arising from intentional acts of misconduct or fraud committed by the notary. For example, if a notary knowingly notarizes a document without the signer personally appearing before them, these actions are excluded from coverage.

Criminal Acts - Any criminal acts committed by the notary, such as theft, embezzlement, or other illegal activities, are not covered under an E&O policy. This exclusion applies regardless of whether the criminal act was related to the notary's professional duties.

Non-notarial Services - Services provided by the notary that fall outside the scope of their official notarial duties are not covered by standard notary E&O insurance. This includes providing legal advice or acting as an advisor. Non-notarial tasks performed by signing agents related to loan signings, such as explaining loan documents to signers, negligence in completing documents on time, and the slow return of date-sensitive documents are also not covered. However, a signing agent E&O insurance policy can help fill in the gaps left uncovered by notary E&O insurance.

Pre-existing Claims - Any claims or circumstances that the notary was aware of before purchasing the E&O policy are not covered. Policies typically exclude claims related to incidents known prior to the policy’s inception.

Bodily Injury or Property Damage - E&O insurance does not cover claims for bodily injury or property damage. For example, if a client slips and falls in the notary’s office, injuring themselves, the E&O policy will not cover medical expenses or legal claims related to this incident; instead, a general liability policy would be needed.

False Advertising - Claims arising from false advertising or deceptive business practices are not covered by E&O insurance.

The Benefits of Having Notary E&O Insurance

Coverage for Legal Costs - One of the primary benefits of notary E&O insurance is the financial protection it provides against the costs associated with legal claims. If a notary is sued for an error or omission, the insurance policy covers legal defense costs, settlements, and any judgments awarded against the notary. This ensures that the notary is not personally liable for these expenses, which can be financially crippling.

Reduced Stress - The legal process can be incredibly stressful and time-consuming. E&O insurance alleviates some of this stress by providing professional legal representation and handling the financial aspects of a claim, allowing notaries to continue their work with minimal disruption.

Competitive Advantage - Notaries with E&O insurance may have a competitive advantage in the marketplace. Clients are more likely to trust and hire notaries who are insured, knowing that they are protected in case of errors or omissions. This can lead to increased business opportunities and a stronger professional reputation.

How to Purchase Notary E&O Insurance?

The American Association of Notaries is a leading provider of notary errors and omissions insurance in most states. Purchasing E&O insurance from the American Association of Notaries is a straightforward process:

1. Visit our  Website: Go to www.usnotaries.com and navigate to the E&O insurance section.
2. Get a Quote: Use our online tool to get a quick and accurate quote.
3. Review Coverage Options: Compare different coverage options and select the policy that best suits your needs.
4. Complete the Online Form: Fill out a short online form with your name and notary commission information.
5. Purchase the Policy: Complete the payment process to secure your E&O insurance coverage.
6. Download Your Policy: Your executed policy is available for download immediately upon checkout.

Conclusion

As a notary public, your role is integral to the legal and financial transactions that keep society functioning smoothly. However, with great responsibility comes significant risk. Notary errors and omissions insurance is a critical safeguard that provides financial protection, peace of mind, and assurance to your clients. By investing in E&O insurance, you can protect your career, reputation, and financial well-being against unforeseen errors and legal claims. Don’t wait until it’s too late—visit www.usnotaries.com today to secure your notary E&O insurance and ensure a secure and successful future in your notarial practice.