Why a Notary Bond?
A notary public is an official appointed position by the Secretary of State’s office in a given state. Just like many public officials, the State specifies that the person get a surety bond before getting their commission. This bond “makes sure” that if the official violates the public trust through negligence of their duties, finances are available to reimburse the State for its loss.
The main responsibility of a notary public is to ensure that the individual parties to an agreement are who they claim to be. The State may suffer a loss if the notary public neglects to properly validate the identity of the parties.
As a public official, the notary public harms the public trust by failing in their duty to confirm identity. If a Minnesota notary public doesn’t confirm identity and a loss occurs, an injured party can file a claim against that State for its loss, because the State was negligent through its appointed representative.
A notary bond is a promise to pay to the obligee (the State) should losses occur for a penalty amount of the bond. Surety bonds are usually provided by a surety company (typically an insurance carrier). The bond often runs concurrently with the term of a notary’s commission.
You’re probably familiar with a property insurance policy. When you have a rental property in Indiana claim, the insurance carrier pays the loss and writes off the loss. You aren’t required to reimburse the company for the damages. Unlike a homeowners insurance policy however, a notary bond is simply a guarantee that the finances will be available when losses occur. The surety (insurance company) pays the State up to the penalty amount of the bond. However, this claim paid by the company is not simply written off. The carrier will most likely seek reimbursement from the bonded party, the notary themself.
A notary bond protects the public. Who protects the notary? Insurance coverage is available to provide this protection – it’s called Notary Public E & O and may also be purchased for a nominal fee from insurance companies.