Many states require Notaries to purchase a surety bond as protection for signers. A surety bond is a financial guarantee that a person who loses money because of a Notary’s misconduct will be reimbursed up to the bond’s limit.
A surety bond is not an insurance policy and doesn’t protect you from liability. If damages are paid to a signer out of a surety bond, you are required to pay back the amount to the bonding company.
For example, if you have a $10,000 bond, and are ordered to pay $1,000 in damages after a lawsuit, the bonding company would pay the damages. Then you would have to repay the bonding company. To protect yourself from liability, you should take out a separate type of insurance policy known as errors and omissions insurance.