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Guest Column: Personal Liability Of Notaries

Many Notaries do not fully appreciate the extent of their personal legal liability in the event they commit notarial misconduct – whether in the form of negligence or intentional wrongdoing – which causes financial injury to some individual or entity. In this column, we will explore the subject of liability, including the topics of Notary surety bonds and Notary errors and omissions insurance.

Here is the most important point to remember. Regardless of whether Notaries are covered by surety bonds and/or errors and omissions insurance, Notaries have full personal liability for any and all financial damages they cause (or even contribute to) as the result of notarial wrongdoing of any kind. Even if a Notary is covered by insurance, there will be a limit on the coverage of the insurance policy, so that the Notary will be personally liable for any amount awarded to the injured party in excess of the policy limit.

Regarding errors and omissions insurance coverage, it is important to be aware that insurance does not protect one who engages in intentional misconduct, such as theft or fraud. Insurance companies will insure only against accidental or negligent occurrences caused by Notaries. Obviously, if insurance did cover intentional wrongs, Notaries would be encouraged to engage in intentionally wrongful conduct since they would have insurance protection if they were to get caught. Similarly, automobile insurance companies cover only accidental automobile collisions, not intentional auto wrecks. Otherwise, insured drivers would sometimes cause collisions on purpose in hopes of getting new or replacement vehicles.

Incidentally, some companies which employ Notaries carry errors and omissions insurance or liability insurance that also, of course, covers their employees. But, that business insurance may not cover notarial conduct. Even many law firm insurance policies expressly exclude coverage for notarial practice. Thus, company Notaries should inquire to determine whether they are covered through their employers’ insurance, and businesses which have Notary employees should be sure to have insurance coverage for notarial mistakes. Company Notaries certainly need to ask their employers to provide them with adequate errors and omissions insurance coverage (and employers should be interested in this coverage as well because it would also protect them in many cases since, under the law of agency, employers would also be vicariously liable for their Notary employees’ misconduct).

Regarding surety bonds, about 35 states and territories require their Notaries to be bonded in amounts ranging between $500 and $15,000. These Notary bonds are intended to protect the public against financial injury caused by Notary wrongdoing (including intentional misconduct committed by the Notary), but Notaries must reimburse the companies for the amounts of the claims paid. On top of that, the bond limit represents the cumulative amount available to pay claims for the bonded Notary during the entire term of the bond contract. Once the bond limit is exhausted as the result of payment of one or more claims, the bond coverage ceases, and the Notary would have to obtain another bond. These surety bond requirements in trivial amounts for Notaries are historic holdovers, which need to be reconsidered by the states and territories.

In conclusion, Notaries should do at least two things to protect against personal liability for wrongdoing. First, be a diligent, thorough and honest Notary. Know the Notary law of your jurisdiction and abide scrupulously by it, while maintaining a detailed journal record of all of your official acts. If you do not engage in any wrongdoing and can prove it with your Notary journal, you cannot possibly be liable for anything. Second, obtain an adequate and affordable level of errors and omissions insurance coverage, taking into consideration the amount and kinds of notarial acts you perform.

Michael Closen is Professor Emeritus at the John Marshall Law School in Chicago, Illinois. A respected consultant on model Notary statutes and legislation, Closen served on the drafting committees for the 1998 Notary Public Code of Professional Responsibility, the 2002 Model Notary Act, and the 2010 Model Notary Act.

2 Comments

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Linda De Luna

13 Jan 2015

Does the Notary Bulletin have a compiled list of Laws and Statutes of Texas? If not, where would I go for such.

National Notary Association

14 Jan 2015

Hello, You can access information on Texas Notary laws through our Notary Law Updates database at http://www.nationalnotary.org/knowledge-center/news/law-updates.

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