A notary 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 obtain a surety or notary bond before receiving the appointment. This bond “makes sure” that when the notary violates the public trust through neglect of their responsibilities, funds are set aside to reimburse the State for its loss.
The principal duty of notaries public is to ensure that the individual parties to an agreement are who they claim to be. The State may experience a loss if the notary public fails to properly confirm the identity of the parties.
As a public official, the notary causes harm to the public trust by failing in their duty to confirm identity. If a Montana notary public doesn’t confirm identity and a loss occurs, an injured party can file a claim against that State for the loss, because the State was negligent through its appointed representative.
A notary bond is a guarantee of payment to the obligee (the State) should losses occur for a penalty amount of the bond. Surety bonds are often provided by a surety company (typically an insurance carrier). The bond generally runs concurrently with the term of a notary’s commission.
You may be familiar with a home insurance policy. When you have a rental property in Indiana loss, the insurance company pays the claim and writes off the loss. You aren’t required to reimburse the company for the claim. Unlike a home insurance policy however, a notary bond is simply a promise that the funds will be available should losses occur. The surety (insurance company) makes a payment to the State up to the penalty amount of the bond. However, this loss paid by the surety is not simply written off. The carrier will most likely seek reimbursement from the bonded person, 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 Errors and Omissions and can also be obtained for a nominal fee from insurance carriers.
