The best way to protect yourself from being held liable in a lawsuit is to exercise “reasonable care” while performing notarizations, which means obeying all laws and carrying out your duties professionally.
Applying reasonable care can mean going beyond the minimum legal requirements and following the best, most professional practices for every notarization. For example, many states provide vague guidance regarding what constitutes satisfactory evidence of identity. But if you insist that every signer produce a valid, government-issued identity document, such as a driver’s license or passport, you will protect yourself and everyone depending on the notarization.
Another good practice is keeping a detailed journal of notarial acts, whether your state requires it or not. That record will demonstrate that you conscientiously follow proper procedures and best practices in the event one of your notarizations is challenged.