What Is Errors And Omission Insurance?
Having an Errors and Omission insurance is absolutely important for a notary public. It is their cushion in the event of an unintentional mistake that can cause harm to the third party. Many people have the misconception that notary public do not need insurance because they are bonded. However, many people do not know that the bond is supposed to protect the public, and a notary has to repay the amount in case of a claim. An errors and omission insurance is necessary to protect the notary public in case of a claim. The notary public will not be asked to reimburse the amount to the insurance company.
Types of Errors Covered By E & O Insurance
Unintentional errors, such as not properly identifying the signer(s) or failure to properly stick the Notarial seal could become the reason of a claim and the notary public will be held liable for the losses incurred by any of the parties. Not all mistakes can lead to a claim on the E & O insurance of the notary public. However, poor judgment or intentional errors will not be covered by the insurance. If a notary public does not have an Error and Omission Insurance, they will have to bear the burden of the costs incurred in court during the process of defending himself, whether the claim is valid or not. Court costs and attorney fees are covered by E & O Insurance, up to the limit of the policy.
Following is a list of some common Notary mistakes:
- In case the commission number of Notary is missing.
- Incorrect wording of the Notary Acknowledgement.
- Notary stamp covering the signatures or text.
- Smudged or smeared notary stamp.
Notary publics also perform signing services for loans. There is more room for errors in those cases such as:
- Notice of Right to cancel dates being incorrect.
- Use of white-out to correct the mistakes in the document(s).
- Closing instructions are not followed properly.
- Not returning the loan document on time.
- Improper completion of Notary acknowledgment.
- Accepting checks more than the amount that is allowed by the State Law.
- Checks made to the wrong company.
Having Errors and Omission Insurance is not required by the law but it is necessary in order to protect you against any unintentional mistakes. Not all of these mistakes can lead to a claim on your E & O Insurance. However, E & O insurance will provide you with a cushion to fall back on in case a claim is made. Even if you have committed an honest mistake and you are being accused of misconduct, your E&O insurance will not only cover the settlement costs or damages but will also cover the cost of your legal defense. Following are some instructions that you should follow in order to get your E & O insurance:
- The first step is to be clear about the kind of Notary services you will perform. If your focus is mainly towards simple copy certifications then you might require less coverage but if you are working for real estate companies or large financial institutions then you might need high insurance.
- Find an agent who specializes in E & O Insurance. He will create a policy for you that are best suited for your specific needs. He will also have access to insurance providers that will help you get the coverage that you require.
- The third step is to present a copy of notary public commission and answer certain questions about the Notarial services that you have been conducting in the past, your qualifications, and training.
- The last step is to choose policy terms and limits that best fit your requirements based on the quotes that your agent provided you, and purchasing the E & O Insurance.
The E & O Insurance rates might vary from State to State, but it is absolutely necessary that you guard yourself from any unforeseen circumstances.