Understanding Notary Errors and Omissions Insurance

 

In today's litigious environment, notaries, like other professionals, are often vulnerable to lawsuits. Clients may file claims alleging negligence or improper conduct, even if such claims are baseless. Defending against these lawsuits can be costly, making notary errors and omissions (E&O) insurance a crucial safeguard.

 

What is Notary Errors and Omissions Insurance?

 

Notary errors and omissions insurance is a specialized form of professional liability insurance designed to protect notaries public from financial losses resulting from claims of unintentional negligence or mistakes in their official duties. This policy provides coverage for legal defense costs, settlements, and judgments up to the policy limits.

 

Distinguishing Between a Notary Bond and Notary Errors and Omissions Insurance

 

A notary bond is a type of surety bond required by many states. It guarantees that the notary will perform their duties ethically and in compliance with the law. If a claim is made, the surety company pays the claimant up to the bond amount, and the notary must reimburse the surety for the payout.

 

Conversely, notary errors and omissions insurance does not require the notary to repay the insurance company for claims paid out. This insurance covers legal defense costs, settlements, and judgments, providing financial protection without requiring reimbursement from the notary.

 

Examples of Claims Covered by Notary Errors and Omissions Insurance

 

  1. Forgery Allegations: A notary's seal and signature were forged on a document. Despite the notary's denial of the notarization, substantial legal defense was required. The E&O insurance covered these defense costs.

  2. Missing Signature: A lawsuit was filed after a notarized document was discovered with a missing signature, causing financial loss. The E&O insurance covered both the legal expenses and the settlement.

  3. Fraudulent ID: A notary was sued for negligence after notarizing a document with a fraudulent ID. The E&O insurance covered the legal defense costs associated with the lawsuit.

  4. Incomplete Notarial Certificate: A notary failed to complete all required sections of a notarial certificate, resulting in an invalid notarization and a lawsuit. The E&O insurance covered the associated costs.

 

Common Exclusions in Notary Errors and Omissions Insurance

 

To fully understand the protection provided by E&O insurance, notaries should be aware of common exclusions:

 

  • Intentional Misconduct and Fraud: Claims arising from deliberate misconduct or fraud are not covered. For instance, knowingly notarizing a document without the signer present is excluded.

  • Criminal Acts: Criminal activities, including theft or embezzlement, are excluded, regardless of their relation to notarial duties.

  • Non-notarial Services: Services outside the scope of official notarial duties, such as legal advice or loan document explanations, are not covered. Signing agent E&O insurance may address gaps in coverage for such services.

  • Pre-existing Claims: Claims related to issues known before purchasing the policy are excluded.

  • Bodily Injury or Property Damage: E&O insurance does not cover claims for bodily injury or property damage. General liability insurance is needed for such incidents.

  • False Advertising: Claims related to false advertising or deceptive practices are not covered.

 

Advantages of Notary E&O Insurance

 

  • Coverage for Legal Costs: E&O insurance protects against the financial burden of legal claims, including defense costs, settlements, and judgments, ensuring the notary is not personally liable for these expenses.

  • Reduced Stress: E&O insurance alleviates stress by managing legal representation and financial aspects of claims, allowing notaries to focus on their work.

  • Competitive Edge: Having E&O insurance can enhance a notary’s marketability. Clients are more likely to engage insured notaries, increasing business opportunities and bolstering professional reputation.

 

Conclusion

 

As a notary public, your role is essential to the legal and financial transactions that facilitate societal functions. With this responsibility comes inherent risk. Notary errors and omissions insurance offers vital financial protection, peace of mind, and client assurance. By investing in E&O insurance, you safeguard your career, reputation, and financial stability against unforeseen errors and legal claims.

 

Legal Disclaimer: The Spokane Notary Group endeavors to furnish accurate and current information within our blog postings. However, it is imperative to recognize that the content provided in our blogs are intended for general informational purposes only and should not be construed as legal advice. We do not hold ourselves out as attorneys, and we make no warranties regarding the accuracy, completeness, or reliability of the information presented. It is strongly advised that you seek the counsel of a licensed attorney for any legal matters. Under no circumstances shall the Spokane Notary Group, its employees, or contractors be held liable to you for any claims, penalties, losses, damages, or expenses arising in connection with the use of the information contained in our blogs. This includes, but is not limited to, direct or indirect losses, as well as consequential losses. It is your responsibility to familiarize yourself with the applicable notary laws governing your state. Notaries are encouraged to consult with their state's notary authorities or legal professionals if they have inquiries of a legal nature. In the event that any portion of this disclaimer is deemed unlawful or unenforceable by a court or other competent authority, the remaining sections of this disclaimer shall remain in full force and effect.