What is Notary E & O?
A notary is an official appointed position by the Secretary of State’s office in any state. As with most public officials, the State requires that the individual obtain a notary bond before getting the appointment. This bond “makes sure” that when the notary violates the public good through negligence of their responsibilities, finances are available to indemnify the State for its loss.
The primary duty of a notary public is to ensure that the individual parties to a contract are who they claim to be. The State might experience a loss if the notary forgets to properly validate the identity of each party.
As a public official, the notary causes harm to the public good by failing in their responsibility to verify identity. If a New Mexico notary public doesn’t verify identity and a loss occurs, an injured party might file a claim against that State for the loss, because the State was negligent through its appointed official.
A notary bond is a guarantee of payment to the obligee (the State) if losses occur for the limit of the bond. Surety 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 truck insurance policy. When you have an auto insurance in Indiana loss, the insurance company pays the loss and writes off the loss. You aren’t forced to pay back the company for the damages. Unlike a truck insurance policy however, a notary bond is simply a guarantee that the finances will be available when a loss occur. The surety (insurance company) makes a payment to the State up to the penalty amount of the bond. However, this loss paid by the carrier is not simply written off. The carrier will most likely seek reimbursement from the bonded person, 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 may also be obtained for a nominal fee from insurance companies.
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