By NNA Staff on May 13, 2015
Updated 7-11-22. A Notary’s essential duty is to authenticate identities to protect consumers from fraud. But if one of your notarizations is challenged, who protects you? If you do not have a Notary Errors and Omissions (E&O) insurance policy, you’re on your own.
While most Notaries will never have a claim made against them, it's imporant to know what to do if it happens to you.
You may purchase E&O insurance when you become a Notary or when you renew. To help you understand how E&O insurance works, here are some answers to frequently asked questions:
Is E&O insurance the same as my Notary bond?
No. The surety bond most states require Notaries to buy is designed to protect consumers, not the Notary. If someone files a claim against you, and a loss is paid out of your bond, your bond company will come after you to repay the amount of the loss and any legal costs. If you had a full loss on a $15,000 bond, for example, your total tab could run $20,000 or more.
E&O insurance is designed to protect you from unintentional mistakes or oversights which cause financial harm to a client or the public. If a claim is filed, the policy will cover the loss and your legal defense as specified by your policy.
Does every Notary need E&O insurance?
It depends. Talk to your employer to find out if their insurance policy covers you when performing notarizations. It usually only covers you for notarizations performed as part of your work duties and you still may benefit from an E&O policy if you notarize outside of work.
If you are a Notary signing agent or otherwise self-employed, an E&O policy is advisable because it’s your only financial protection against claims.
What does E&O cover?
Typically, E&O insurance covers the amount of the claim against you and, in most states, attorney fees and court costs up to the limit of the policy. (In some states, E&O policies have separate limits for legal expenses.) E&O protects you from unintentional mistakes and human error. However, unlike a bond, a policy doesn’t cover acts of fraud and deliberate acts.
Failing to spot an imposter with a fake ID, for example, is an unintentional mistake and would be covered. Conspiring with the imposter to defraud someone, on the other hand, would not be covered.
Also, for self-employed Notaries, it’s important to remember that a Notary E&O policy only covers you for your notarial acts. It does not cover you for other liability claims or breaches of privacy that are not duties of a Notary in your state.
How much E&O coverage do I need?
This varies based on your needs. The standard recommended by the Signing Professionals Workgroup is $25,000. Some companies, however, want NSAs they hire to carry more coverage.
For non-NSA Notaries, an E&O policy should be sufficient to cover the amount of your bond, if required, plus coverage for additional expenses. Also consider how much you might need to protect your assets should they be affected in a lawsuit on account of a negligent notarization you perform.
Are you covered when you stop being a Notary?
It depends on the type of policy you have. If you or your employer has what’s called an “occurrence-based policy,” you’re covered for notarizations performed when the policy was in effect (even if you have left the job or stopped being a Notary).
If you are covered by what’s known as a “claims-made policy,” you are only protected if the claim is filed while the policy is in effect. Once you stop paying policy premiums or premiums for “tail coverage” to extend the time to report claims, if applicable, you’re no longer covered.
How much does a policy cost?
Premiums vary by state as well as the amount and term of the policy. You can get a quote from any insurance agent or broker licensed to sell property and casualty insurance.
There is a potential benefit to buying E&O from the same company that provides your bond. If you do that, the company will generally pay any claims and expenses out of your E&O policy before your bond. Also, some states require any claim paid from your bond to be reported to the Notary commissioning official’s office, and your commission can be suspended until your bond is reimbursed.
How E&O Insurance Helps You
The decision to buy E&O insurance is personal and depends on your circumstances, yet an affordable policy can protect you from:
Financial damages due to an error or omission filed against your NNA bond
Financial damages as a result of unintentionally violating the law while notarizing
Defense costs from being named in a lawsuit even if you did nothing wrong
Damages, when unbeknownst to you, your seal and forged signature appear on a document conveying title to real property – and a lender or property owner suffers a loss.
Please check the terms for your E&O insurance policy by carefully reviewing your policy document. All claims will be handled and settled in accordance with the policy terms and conditions.