A Notary authenticates identities to protect consumers from fraud. But if one of your notarizations is challenged, who protects you? If you don’t 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 important to know what to do if it happens to you. In this guide, you’ll understand how E&O insurance works and how much coverage you may need.
How Notary 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 surety 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 your seal and forged signature unknowingly appear on a document conveying title to real property, causing a loss to a lender or property owner
To understand how claims are handled and settled, refer to the terms and conditions in your E&O insurance policy document.
What E&O insurance covers
Typically, E&O insurance covers the amount of the claim against you and, in most states, attorney fees and court costs up to the policy limit. In some states, E&O policies have separate limits for legal expenses.
What E&O policy covers:
- Failure to spot an imposter with a fake ID
- Mistakes or omissions in notarization
- Allegations of negligence during notarization
- Financial harm due to a delayed notarization
What E&O policy doesn’t cover:
- Intentional fraud and misconduct
- Collusion with an imposter to defraud someone
- Liability claims or breaches of privacy outside the duties of a Notary in your state
- Unauthorized legal advice
- Non-compliance with state Notary laws
Does every Notary need E&O insurance?
While Notary E&O insurance is not required, it’s strongly recommended. If you notarize documents as part of your job, ask your employer if their insurance policy covers you when performing notarizations. It usually only covers you for notarizations performed as part of your work duties, so you still may benefit from an E&O policy if you notarize outside of work.
If you’re a Notary Signing Agent or otherwise self-employed Notary, an E&O policy is your only financial protection against claims.
E&O insurance vs. Notary bond
Errors and omissions insurance is not the same as a Notary bond. E&O insurance is designed to protect you from unintentional mistakes or oversights that 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.
The surety bond most states require Notaries to get is designed to protect consumers and 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, you may be liable to pay $20,000 or more.
E&O coverage
The amount of E&O insurance you need as a Notary is based on your requirements. The Signing Professionals Workgroup recommends Notaries secure a $25,000 E&O insurance policy. Some companies, however, prefer Signing Agents they hire to carry more coverage.
For Notaries providing general Notary work, an E&O policy should be sufficient to cover the amount of your bond, if required, plus coverage for additional expenses.
When deciding on your E&O coverage amount, 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.
When does E&O coverage end?
There are two types of E&O insurance policy: 1) Occurrence-based policy and 2) Claims-made policy.
- Occurrence-based policy: With this policy, you’re covered for notarizations performed when the policy was in effect. If a claim arises after you’ve left the job or stopped being a Notary, you’re still covered as long as the notarization happened during the policy period.
- Claims-made policy: You’re only protected if the claim is filed while the policy is in effect. Once you stop paying premiums, you lose coverage unless you purchase tail coverage, which extends the reporting period for claims related to notarizations done while the policy was active. Occurrence-based policies protect you for work done in the past, while claims-made policies only cover claims filed within the policy’s active period (or extended tail coverage, if purchased).
Cost of E&O insurance
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, which may result in the suspension of your commission until your bond is reimbursed.