Notaries are persons empowered by a state to perform certain legal functions. Notaries serve in law firms, title companies, banks, government, and private offices. They provide services including taking acknowledgments, administering oaths and certifying copies by affirming signature. A notary surety bond is not meant to protect a notary, but to protect the clients of the notary. Notaries often make mistakes that can be significant and costly to the clients and may invalidate the entire legal document. Hence most states have a bonding requirement as part of the notary public registration process to protect the people who use notary services. The notary bond works like any other professional surety bond. The bond does not transfer liability away from the notary, but assures the consumer that the notary is licensed to perform the services and able to provide reimbursement in the case of faulty work.
A notary bond is an agreement between three parties namely, the state, the surety company who underwrites the bond, and the notary.
The required value of a notary surety bond varies from state to state. In most states, the amount charged is somewhere between $5,000 and $15,000. The cost of obtaining the bond is as little as $35 to $50 depending on the surety company.
Since, notaries are licensed through the states, a claim against the notary is filed against the state. The surety company collects a fee to write the notary bond. “If a claim is made, the surety pays out to the state, as obligee, in the amount of a claim, up to the maximum limit of the bond and the payment is used to settle the claim for damages by the notary’s client.” The notary is the principal and is liable to the surety company, who can collect the full amount of the payment from the notary directly. This may cause an unexpected risk to the notary and active notaries often take an Errors and Omissions insurance an additional protection. The Errors and Omissions policy is meant to cover the personal liability of the notary in the event where a claim against the notary surety bond is paid, and the surety seeks to collect compensation from the notary.