Errors and Omissions Insurance Guide: What It is & Why Have It?

Medical professionals get malpractice insurance. 

Entrepreneurs and independent contractors purchase business liability insurance.

For Notary Publics in the U.S., however, there is a specialized form of protection called errors and omission insurance, also known as E&O insurance. Even though many businesses use a structure that limits personal liability, it’s alarming how quickly professional liability can turn into a personal nuisance. 

Liability insurance is especially important for those who plan to make a living off their expertise. Having errors and omissions insurance will allow Notary Publics to function as both a fee-earning “entrepreneur” and a public individual occupying a state-designated position. 

This protects the integrity of their work, while ensuring that people who find serious errors or omissions can still claim damages.

What is Errors and Omissions Insurance?

Errors and omissions insurance essentially protects Notary Publics from any unintentional mistakes that a Notary Public can make in the course of their work with clients. These errors can be minor details but their exclusions can still affect the processing of their paperwork. 

In some cases, what seems like a relatively unimportant error or omission can then invalidate an official document. 

When a Notary Public doesn’t have insurance, they’re not protected from these third party claims. In this case, a Notary Public will be responsible to pay for any financial damages a third party or a client may demand. 

They will not only lose money, they will also lose their business and tarnish their reputation without E&O insurance. 

In many ways, E&O insurance is the Notary Public’s version of liability protection. No third party client can claim monetary damages that then must come from the Notary Public’s own pocket. Instead, the E&O insurance payment takes care of the disbursement of these claims. 

Notary Publics deal with a lot of detailed processes and specific requirements around documentation like affidavits, real estate deals, jurats, and acknowledgments.

The Difference Between Insurance and Bonding for a Notary Public

You may think that Notary Publics already have insurance in the form of bonding. However, the bond that a Notary Public has to pay at the time that they become commissioned is a protection from any actions that result in a client’s financial loss. In a way, this amount is also a penalty against these potentially harmful actions. 

Also known as a “surety bond,” the amount is a financial guarantee that a hopeful Notary Public will purchase from a bonding or surety company. This occurs during the time of application and examination, so it’s an important part of a Notary Public’s initiation into office. 

The Notary Public will have to pay back the amount a client claims because the surety bond has a limit. If a claim exceeds the amount of the surety bond’s limit, the Notary Public is also not allowed to perform their duties until they replace their bond.

A surety bond for Notary Publics does cover any damage to clients that claims financial remuneration that comes from a Notary Public, especially because of a misconduct or negligence. 

In this way, it protects the public against the Notary Public’s actions. E&O insurance, on the other hand, protects Notary Publics against personally paying for damages and claims.  

Types of Errors a Notary Public Can Make

The most serious Notary Public errors are almost always unintentional — but they will still occur and may result in claims filed against the surety bond. However, as a Notary Public, your E&O will instead cover these claims so that your surety bond isn’t affected. 

It’s surprising to learn that the most common mistake made resulting in a third party claim is notarizing a document without the personal appearance of the signer. This notarial rule has absolutely no substitutions or leeway. This would be considered an intentional error or simply poor judgment and that is simply not covered by E&O insurance. 

Other common mistakes include: 

• Setting incorrect dates
• Using white-out on documents
• A failure to place Notarial seal properly
• Stamp covering signatures or text
• Partial or improper completion of certificate/form
• Checks with wrong or missed details
• Smudged or smeared stamp appearance

These frequent errors and omissions are always covered by insurance and a Notary Public won’t have to pay this amount back. 

What Can Be Covered By Errors and Omissions Insurance?

The amount of a claim can be substantial but that’s not the only aspect that insurance funds can cover. 

The idea is to protect your business, your personal assets, and your reputation from third party claims by having the payout amount compensate for a number of costs. E&O insurance will pay for these essential costs in case a Notary Public is found legally liable for common mistakes. 

1) Court Costs

Filing applications and court documentation takes money and errors and omission insurance can help take care of these administrative costs. They’re certainly not as prohibitive as the rest of the claim but these figures can add up.

2) Attorney Fees

If a Notary Public needs an attorney to legally defend their actions in court, insurance will also cover all associated attorney fees for the claim. 

3) Amount Claimant Is Filing For

Also known as punitive damages, the bulk of errors and omissions insurance coverage is designed to respond to the amount the claimant is filing for. 

Unlike the limits of a surety bond claim, E&O insurance only has a cap based on what the coverage or policy limit is. The Notary Public also doesn’t have to pay this amount back yet. 

Conclusion

At Superior Notary Services, we’re committed to helping you preserve the integrity of your documentation through our unique and convenient mobile signing services. With a partner network of over 50,000 signing agents nationwide, and 20 years of operations under our belt, we’re the first choice in notary services. 

Take advantage of our efficient and detailed mobile signing services that come to your home or office during off-hours and weekends. Contact our team to learn more about Superior Notary Services today.