How Notaries protect the public
A notary is an official appointed position by the Secretary of State’s office in a given state. Like many public officials, the State requires that the individual obtain a surety or notary bond prior to receiving the commission. This bond “makes sure” that if the official violates the public trust through neglect of their duties, finances are available to reimburse the State for its loss.
The principal duty of a notary is to ensure that the individual parties to a contract are who they claim to be. The State may suffer a loss if the notary neglects to properly confirm the identity of the parties.
As a public official, the notary causes harm to the public trust by failing in their responsibility to confirm identity. If a Michigan notary public doesn’t confirm identity and a loss occurs, an injured party can file a claim against that State for its loss, because the State was negligent through its appointed representative.
A notary bond is a promise to pay to the obligee (the State) should losses occur for a penalty amount of the bond. Surety bonds are usually provided by a surety company (typically an insurance carrier). The bond often runs concurrently with the period of a notary’s commission.
You may be familiar with a property insurance policy. If you have a rental property in Indiana claim, the insurance carrier pays the loss and writes off the loss. You aren’t required to reimburse the company for the damages. Unlike a home insurance policy however, a notary bond is simply a promise that the funds will be available should losses occur. The surety (insurance company) pays the State up to the penalty amount of the bond. However, this claim paid by the company is not simply written off. The surety will most likely seek reimbursement from the bonded person, the notary themself.
A notary bond protects the public. Who protects the notary? Insurance coverage is available to provide this protection – it’s called Notary Public Errors and Omissions and may also be obtained for a nominal fee from insurance companies.