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Hotline Tip: The Difference Between A Surety Bond And E&O Insurance

NNA Hotline Tips For NotariesMany people are confused over the differences between surety bonds and errors and omissions insurance. For Notaries, the differences are crucial.

Many states require Notaries to purchase a surety bond to protect their signers. A surety bond is a financial guarantee that a person who loses money because of a Notary’s misconduct or fraud will be reimbursed up to the bond’s limit.

A surety bond does not protect the Notary. If damages are paid to a signer out of a surety bond, the Notary is required to pay back the amount to the bonding company.

E&O insurance is designed to protect Notaries from liability. If a claim is made against a Notary, the E&O policy typically pays legal fees and losses up to the limit of the policy. You do not have to reimburse the insurance company for any costs incurred by a claim.

Unlike a Notary bond, E&O insurance covers negligent errors and omissions only; it does not cover criminal acts or frauds.

Regardless of your state’s bond requirements, it’s always a good idea to have an E&O policy because a claim can be made against you even if you have done nothing wrong.

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