Most states require notaries to purchase a surety bond, which safeguards the public from financial loss caused by notaries who make mistakes or behave unethically. Many people believe that surety bonds provide insurance protection to notaries — but that's a common misunderstanding.

If you want extra protection from lawsuits and financial losses that can arise from an honest notarization mistake, errors and omissions insurance can provide you peace of mind.

Errors and omissions insurance, also known as E&O insurance, is professional liability insurance designed to protect notaries. If you make an error or unintentional omission while notarizing, E&O insurance will prevent you from having to pay for the resulting legal costs out of pocket.

Why a Surety Bond Isn't Enough

Surety bonds represent the notary's promise to act in good faith and uphold the law. If a notary behaves unethically or makes a careless mistake that results in financial loss, he or she is responsible for the cost up to the bond amount, which can range from $1,000 to $25,000. The notary is also responsible for paying any legal fees associated with the negligent act.

If the notary cannot pay, the surety company will cover the cost of the claim. But the notary is required to repay the company for all losses, costs, and expenses related to the claim. Unfortunately, this can put the notary's financial assets and business at significant risk.

One Possible Scenario

For a realistic scenario where E&O insurance provides invaluable protection, consider this claim scenario from Travelers Casualty and Surety Company of America:

"A local notary was called urgently to a hospital to notarize a power of attorney (POA) for an elderly woman. The notary spoke with the woman executing the POA and the relative that was receiving the powers that were being granted by the woman. As reported by the notary, both individuals 'seemed nice' and nothing appeared out of the ordinary, so she notarized the POA. The notary was later sued by family members of the woman that executed the POA as it was alleged that the man that received the powers ended up abusing his powers and stealing from the elderly woman. The plaintiffs claimed the individual signing the POA was not competent and the notary was negligent for notarizing the document."

For more scenarios that highlight the importance of E&O insurance, read our Traveler's Notary Bond guide.