Most Texas notaries believe their required $10,000 bond protects them from mistakes. It does not. It protects the public, but you are still personally liable for any financial harm caused by an error. That’s where Notary Errors & Omissions insurance comes in.
Your Bond Isn't Your Protection
A Texas notary bond is a surety bond required by the state. If you make a mistake and it costs someone money, your bonding company will pay the injured party up to $10,000. However, the bonding company will then come to you to be reimbursed for the full amount, plus legal costs. The bond guarantees you can pay; it is not insurance for you.
This is a critical distinction many notaries miss. Without insurance, your personal assets—your home, your savings, your car—are all at risk if you are sued for a notarization error.
What Notary E&O Insurance Covers
Notary Errors & Omissions (E&O) insurance is a professional liability policy designed specifically for notaries. It covers your personal and professional assets if you are sued for a mistake you made while performing your notarial duties. It pays for:
- Legal defense costs, including attorney fees and court costs.
- Judgments or settlements against you, up to the policy limit.
- Lost income if you have to appear in court.
Even a simple, unintentional mistake can lead to a lawsuit. A typo, a missed signature, or failing to properly verify an ID could have significant financial consequences for the parties involved in the transaction. If they suffer a loss, they can sue you to recover it.
Common Scenarios for Claims
Claims against notaries often arise from situations you might not expect. For example:
- A last-minute document signing for a real estate closing where a name is misspelled, causing a funding delay and costing the buyer thousands in fees. The buyer could sue you to recover those costs.
- You notarize a signature for someone who turns out to be an imposter, leading to a fraudulent property transfer. The rightful owner could sue you for their loss.
- A simple clerical error in a jurat or acknowledgement makes a legal document invalid, leading to a lawsuit from the party who was harmed.
In each of these cases, your E&O policy would step in to provide your legal defense and pay the claim if you are found liable, protecting your personal finances.
How Much Coverage Do You Need?
E&O policies are affordable, especially compared to the potential cost of a lawsuit. Coverage limits typically start at $25,000 and can go up to $100,000 or more. The cost is usually just a few dollars per month.
For notaries who handle high-value transactions, such as real estate closings or estate planning documents, higher limits are recommended. For mobile notaries and signing agents, the risk is even greater due to the volume and complexity of the work.
Don't make the common mistake of relying on your bond. It is not your safety net. A proper Errors & Omissions policy is the only way to truly protect yourself from the financial risks of being a notary public. If you have questions about the right coverage for your notary business, reach out and we can review your options.
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