What is Notary E & O?
A notary public is an appointed position by the Secretary of State’s office in a given state. As with many public officials, the State requires that the individual get a surety or notary bond before getting the appointment. This bond “makes sure” that when the official violates the public trust through negligence of their responsibilities, funds are available to indemnify the State for its loss.
The principal duty of notary publics is to confirm that the individual parties to a contract are who they claim to be. The State may suffer a loss if the notary public neglects to properly validate the identity of the parties.
As a public official, the notary public violates the public trust by failing in their duty to confirm identity. If a notary public in Michigan doesn’t confirm identity and a loss occurs, an injured party can file a claim against that State for the loss, because the State was negligent through its appointed representative.
A notary bond is a promise to pay to the obligee (the State) if losses occur for a penalty amount of the bond. Notary Public bonds are often provided by a surety company (typically an insurance carrier). The bond often runs concurrently with the period of the notary’s commission.
You may be familiar with a homeowners insurance policy. If a person has a property insurance in Indiana claim, the insurance carrier pays the loss and writes off the loss. You aren’t required to reimburse the company for the damages. Unlike a home insurance policy however, a notary bond is simply a promise that the finances will be available when losses occur. The surety (insurance company) pays the State up to the penalty amount of the bond. However, this loss paid by the carrier is not simply written off. The company will most likely seek reimbursement from the bonded party, the notary themself.
A notary bond protects the public. Who protects the notary? Insurance coverage is available to provide this protection - it’s called Notary Errors and Omissions and can also be obtained for a nominal fee from insurance companies.