Your Cookies are Disabled! NationalNotary.org sets cookies on your computer to help improve performance and provide a more engaging user experience. By using this site, you accept the terms of our cookie policy. Learn more.

Notary Bulletin

Feature

Filling the gap: What Notary E&O insurance will and won’t cover

Just about every mobile Notary has Notary errors and omissions insurance. In fact, having an E&O policy is a business requirement for Notary Signing Agents to get loan-signing assignments from title companies and signing services.

The mistake many NSAs make is thinking that their Notary E&O policy is a catchall safety net that protects them from lawsuits and claims resulting from any mistake they might make. Depending on what the claim is, you could be on the hook for a lot of money if something goes wrong.

Most states require Notaries to purchase a bond, which protects signers from losses due to a mistake with a notarization. The Notary E&O policy protects the Notary against claims. Here's the catch: Notary E&O covers only actions related to a Notary's capacity as a duly commissioned and sworn officer of the state. That means it does not cover acts unrelated to notarizations, like practically everything else an NSA is required to do.

Forget to mail the closing check? Lose the title company's paperwork? Mail something to the wrong bank? Notary E&O would not cover the NSA in these cases because these errors do not relate to the performance of a notarial act. Kim McPartland, a claims examiner with Merchants Bonding Company, explained that many NSA’s are shocked when they learn that there is no coverage under an E&O policy because the alleged wrongdoing fell outside the scope of a Notary's official duties.

What is covered by E&O?

At the end of the day, the main duty of a Notary is to identify a signer. "Anything that stems from a non-notarial duty, like putting Fed Ex in the mail in a timely manner is outside the scope of coverage of the Notary" E&O policy," she said. "It's not the Notary's job to make sure documents are sent in a timely manner." That's the Signing Agent's job.

"It's not the Notary's job to make sure documents are sent in a timely manner."

Merchants Bonding Claims Examiner Kim McPartland

In fact, the language in a standard E&O policy will be very clear about what is covered. In one example, the policy states that the insurance company will pay under the following conditions: “Breach of duty while acting as a duly commissioned and sworn Notary Public…arising out of the performance of notarial services for others in the insured's capacity as a…Notary.”

McPartland stressed the importance of reading and understanding the policy. "The NSA could be liable if someone files a lawsuit, and it goes to court. They need to know what their policy covers."

What isn't covered by E&O?

McPartland shared a few examples of Notary E&O policy claims that were denied due to lack of coverage because the Notary was performing tasks as a Signing Agent, not in their official capacity as a Notary.

In one case, an Illinois NSA put the wrong loan payoff amount on closing settlement documents he prepared. It was his responsibility to make sure the payoff amount was correct. The mistake caused the sellers to lose more than $6,000. This mistake was a result of his duties as a Signing Agent, not a Notary, so it was not covered under his E&O policy.

A New York Notary sent the payoff letter and payoff check back to the wrong title company. This error caused a delay in the closing and damages of more than $3,000. Again, because the damages were a result of the Notary's work as a NSA, the claim was denied.

In California, a title company alleged that the Notary failed to send the closing documents to a lender in a timely manner, causing damages of $90. Since this act fell under the NSA's work as a closing agent the claim was denied.

In another case, a Michigan Notary failed to deliver the completed closing package to Fed Ex in a timely manner, causing the title company to have to re-issue the closing check. The NSA was on the hook for more than $3,500.

And in one extraordinary case, a NSA misplaced a cashier's check for more than $50,000. McPartland explained that since getting a cashier's check to the correct location is not a notarization-related task, but rather a Signing Agent task, there was no coverage under the E&O policy and the claim was denied.

None of these examples involved problems with a notarization, which is why none of them were covered under the Notary's E&O policy.

Mitigating Risks

All mobile notary work involves risk — NSAs are driving at all hours of the day and night without the resources of a home office or additional staff members who can help out in a pinch by printing or mailing hefty loan packages, and other tasks. They also handle a huge variety of documents and paperwork, and it's easy enough to lose something or mail it late. To top it off, their mistakes as independent contractors are not usually covered by the company who hires them, such as a title or lending company. In fact, the title company may come after the NSA for damages in order to minimize its own liability.

Notary E&O insurance is not the only product on the market to protect Notaries. One product, called a signing agent policy, will pay for many of the types of claims that E&O does not cover. Notaries have a variety of insurance companies to choose from, depending on the state in which they live and their personal insurance needs.

Signing agent insurance is designed to fill the gaps not covered by traditional Notary E&O. That means signing agent policies will cover mistakes such as incorrectly dating the right of rescission, untimely completion of the signing, and a slow return date of sensitive documents. A simple internet search will yield various options.

Different policies may require different qualifications. You may, for example, be asked to show proof that you have taken Signing Agent training, belong to a professional association or keep a journal. Different policies will also have different deductibles and levels of protection. An NSA who performs just a few closings a month will likely want a higher deductible and a smaller overall amount of coverage than an NSA who does several closings a day.

You also could consult with a trusted local insurance broker. Remember, as an NSA/mobile Notary, you are operating a small business, and every business — large or small — needs proper insurance.

Whatever products you choose, McPartland recommends that you read the policy in its entirety and make sure that it covers the bulk of your typical closing duties. At the end of the day, you don't want to be surprised when a claim situation arises and you learn that you have exposure because of gaps in your existing insurance coverage.

22 Comments

Add your comment

Karl Fortsch

09 Nov 2020

What are the rules on expired ID in New Jersey?

National Notary Association

10 Nov 2020

Hello. New Jersey does not provide statutory guidance regarding expired IDs. The “New Jersey Notary Public Manual” instructs that signers present “at least one form of identification (ID) that provides a physical description of the signer — e.g., driver’s license. Note: Identification documents are not required if: 1) the signer is personally known to the Notary; or 2) a credible witness, known to both the signer and Notary, swears to the identity of the signer.”

ken@teleis.com

09 Nov 2020

This article was helpful, but it might be more helpful if NNA would partner with an insurance company to offer signing agent insurance. I've been a signing agent for 20 years and only recently did I learn that E&O did not cover signing agent errors. As much as NNA promotes the signing agent program, one would think this would have been made clear to signing agents long ago.

National Notary Association

17 Nov 2020

Hello. The Notary E&O policy offered by the NNA covers notarizations performed on any type of document, including loan documents. Demand for Signing Agent-specific E&O policies is extremely low since it only covers notarial acts performed on real estate documents, and many Notaries see it as unnecessary double-coverage. It is up to the individual Notary Signing Agent to decide if additional coverage for non-Notary services they provide is appropriate for their business needs or not. However, the NNA regularly reviews the services and supplies we offer and we will certainly consider your feedback.

Tammera D Price

09 Nov 2020

so if the E&O insurance does not covering signing agent errors then why is it that it is pushed as a necessity when you take the course? So what other insurance options are given or recommended for additional coverage for these other errors that do not fall under the E&O coverage scope?

National Notary Association

09 Nov 2020

Tammera, thanks for your question. Notary E&O covers errors like failing to date a notarial certificate, failing to put the name of the borrower for whom they performed the notarization in the notarial certificate, failing to identify the person signing the mortgage, deed of trust, power of attorney or deed. Industry players want Notaries to have a minimum amount of Notary E&O to have "skin in the game." If you look for a signing agent policy, in addition to covering non-notarial errors like the ones addressed in the article, make sure you look at the coverage in the policy for Notary errors. Some signing agent policies will limit coverage of Notary mistakes to those performed as a signing agent only or for documents related to real estate. If you have a mobile Notary business in addition to a signing agent business, Notary E&O will afford broader coverage for Notary errors.

Steven Huber

09 Nov 2020

So why doesnt the NNA offer LSA E&O insurance if the policy they offer only covers GNW? I smell a fish here. Offer LSA insurance or dont make it necessary as part of the LSA course.

National Notary Association

17 Nov 2020

Hello. The Notary E&O policy offered by the NNA covers notarizations performed on any type of document, including loan documents. Demand for Signing Agent-specific E&O policies is extremely low since it only covers notarial acts performed on real estate documents, and many Notaries see it as unnecessary double-coverage. It is up to the individual Notary Signing Agent to decide if additional coverage for non-Notary services they provide is appropriate for their business needs or not. However, the NNA regularly reviews the services and supplies we offer and we will certainly consider your feedback.

Gyna

09 Nov 2020

Great article with helpful information. A title company I tried to get direct business requires this insurance but she did not know what it was called my State Farm Agent was not familiar with it either. Now I have the name and can further investigate.

Karen Lohmeyer

09 Nov 2020

I was surprised to hear that a signing agent was responsible for putting the loan payoff amount on the closing settlement documents he prepared. I thought the signing agent was responsible for notarizing signatures, not filling out forms. ???

RONNEEK

09 Nov 2020

Great article. I just finished the course and this was very informative. I will be looking into the extra insurance for NY. Any suggestions?

Julie.white.jw@gmail.com

09 Nov 2020

This article left me a tad confused as to what examples E&O insurance does cover. Out of curiosity, is there any particular reason why an NSA would be putting a loan amount on a document?

Rachel Reed

09 Nov 2020

This is a great article, thank you. I never thought about what my E&O covered. I will be definitely looking into additional.

Bomi V Patel

09 Nov 2020

Quite Expensive Policy, $270 minimum per year for $250K coverage. I am in CA. The policy is by Hiscox Does anyone know other companies

Ramona L Sinhart

09 Nov 2020

Please answer honestly and clearly. Does the NNA E&O policy cover ALL notarial acts?

National Notary Association

10 Nov 2020

Hello. Our records show you are located in Washington state. Whether "ALL notarial acts" are covered under the NNA's Washington state policy depends upon the facts of each case and whether they qualify under the terms and conditions of the policy. The Washington state policy form says the policy will cover "any negligent act, error or omission, committed or alleged to have been committed against the Insured, arising out of the performance of notarial service for others in the Insured's capacity as a duly commissioned and sworn Notary Public." That's a lot of legalese, but let's break it down. It will cover "any negligent act, error or omission." The policy will not respond to notarial acts based in dishonesty, fraud, criminality, libel, slander, malice, or intentional disregard of the law (see the "Exclusions"). So, in this respect, the policy will not cover "ALL notarial acts." Another key part is "performance of notarial service for others in the Insured's capacity as a ... Notary Public." The policy doesn't limit coverage to notarizations on real estate documents or on documents in any other particular industry. It simply says it will cover "performance of notarial service." But, the "performance of notarial service" must be performed by a "duly commissioned and sworn Notary Public." This would rule out non-notarial actions taken by a signing agent. And, the individual performing the notarial service must be the "Insured" named in the insurance contract. So, as you can see, a simple question, "Does the NNA E&O policy cover ALL notarial acts" must be answered by the policy language itself and the facts surrounding the notarization that is the subject of a claim.

Dean Olsen

09 Nov 2020

This is a topic I have asked the NNA about for years because I was aware of the gap. I am frustrated that this organization is finally admitting they are aware of the gap but still make no effort to offer a solution. I have asked many insurance brokers who offered no remedy except some general liability policy that also doesn't offer the specific coverage at exorbitant rates. Why doesn't the NNA offering the NSA certification required by much of the industry make some minimal effort to protect out guide its members? I found one at nearly a thousand dollars that was a term only policy so it wouldn't cover incidents outside of the annual policy term making it about useless.

LW

09 Nov 2020

My only problem with this.... is the NNA should have this boldly printed when signing up for E&O. Misleading to many new Signing Agents.

Ronneek

10 Nov 2020

I actually been checking around and so far I found simply business for $1 Million with 500.00 deductible for professional liability. The cost is $500 a year and can be broken down to $83.00 monthly for about 6 months. $1 million is the recommended given the type of business. However, they can do $100,000 but that may not be enough if you get sued. I’ll keep checking, but looks pretty expensive. Any other thoughts or suggestions?

Charles

15 Nov 2020

This is a very interesting article, with very good comments, The NNA should respond quickly and better yet create a solution to this problem of gaps. As a National Association you should want to assist your membership in these areas of gaps by offering solutions. If not, in the future you may be looking at lose of members!! And that's not good for your Association if you truly care!??

Michelle Hill

18 Nov 2020

I knew that E&O insurance was fairly limited to only cover errors in notarial acts. The article mentioned that there are insurance policies specifically geared toward signing agent errors, but I haven't been able to find anything but E&O. While I know that NNA probably can not promote specific insurance companies, can you tell us where to find this insurance?

National Notary Association

19 Nov 2020

Hello. You can contact an insurance broker or insurance company that provides business insurance policies to ask if they provide a policy that meets your coverage needs.

Leave a Comment

Required *

All comments are reviewed and if approved, will display.