Understanding Notary Public Insurance
People rely on the professionalism of notaries public. Yet, the nature of the services they offer often exposes them to the risk of liability claims. People visit notaries for various reasons, from authenticating proof of identity in foreign countries to divorces or validating essential documents. But a missed deadline or an error could result in a client suing a notary. This situation could cause the public to doubt the notary’s professionalism or risk the business operations or assets. In such cases, a Professional Liability policy as part of a notary insurance program can come in handy. If a service or advice provided to a client turns out to be erroneous and causes financial loss to the client, or if the client’s claims turn out to be meritless, the Professional Liability carrier will defend against covered acts.
Business and Professional Risks
The state empowers a notary to serve the public. Notaries provide this service by being impartial witnesses to certain legal events like witnessed signatures or verification of official documents. A publicly commissioned official or a notary confirms the authenticity of legal documents required for powers of attorney, licenses, deeds, affidavits, estates, or trusts. Several steps go into the successful completion of the notarization processes.
The state empowers a notary to serve the public. Notaries provide this service by being impartial witnesses to certain legal events like witnessed signatures or verification of official documents. A publicly commissioned official or a notary confirms the authenticity of legal documents required for powers of attorney, licenses, deeds, affidavits, estates, or trusts. Several steps go into the successful completion of the notarization processes.
But who is to prevent notaries from being sued for risks related to their line of work? For protection in such instances, they need Errors & Omissions insurance and possibly General Liability insurance as part of their business insurance portfolio. These policies address claims arising from errors that directly affect their clients or pay for claims arising from an accident. These are some examples of risks that notaries deal with:
- Example 1: Official signature or name doesn't match– If there is a mismatch in a notary’s signature or name on record with the state or if an unofficial signature is used as compared to what was recorded when the notary was appointed, a notarization can get invalidated. In such a case, a client could make a claim or file a suit against the notary.
- Example 2: A notary spills a hot beverage on a client’s expensive phone by mistake. This can attract a third-party property damage liability claim.
- Example 3: Conflict of interest – A notary notarizes a document where he has a financial stake. The notarization gets invalidated because there is a conflict of interest.
- Example 4:Conflict of interest – A notary notarizes a document where he has a financial stake. The notarization gets invalidated because there is a conflict of interest.
- Example 5:Incorrect affixing of notarial seal – A notary’s rubber stamp or embossing seal covers portions of the document text. Such a notarization is not valid and can incur claims.
Recommended Policies
Obtaining the most relevant insurance policies is the recommended strategy for all businesses. It is a way for notaries to protect their assets from professional exposures while conducting their day-to-day operations. Notaries should consider the following policies:
- Professional Liability / Error and Omission Insurance
- General Liability Insurance
- Workers’ Compensation Insurance
- Cyber Insurance
- Notary Surety Bond
Professional Liability / Error and Omission Insurance:
The Professional Liability or the E&O policy offers protection to the notary in the following circumstances:
A notary has been accused of professional negligence or misrepresentation. A genuine error has been made in service delivery. A breach of contract has occurred, including missed deadlines and undelivered services.
These are third-party claims or lawsuits resulting from the notary's professional services rendered to the client.
Example: A vital document signing has been scheduled. The final document has financial implications at stake for the client. Misidentification of one of the signers who presents a false ID is at issue. The resulting lawsuit may put the notary out of business. The Professional Liability policy will defend the notary and pay court fees and damages if they are found legally liable.
General Liability Insurance
This policy will protect a notary public from third-party claims for bodily injury and property damage liability. General Liability insurance also covers the notary against personal injury liability like harm to another caused by libel, slander, or advertising injury. Businesses find General Liability to be a must-have policy that provides defense and pays court fees for covered claims.
Example 1: Slander – A notary public often recounts the errors and omissions caused by a competing notary, causing the other notary mental anguish and harassment. They sue the first notary for slander. The first notary’s General Liability insurance defends the suit and pays the court-ordered estimate of damage to the aggrieved notary public.
Example 2: Bodily injury – While a client is at a notary’s office, he goes to the coffee machine and lifts the glass pot from the coffee machine, which cracks. The entire pot of steaming coffee falls on his leg and burns it severely. The notary’s General Liability policy will pick up the resulting claim from this third-party injury in the notary’s office.
Example 3: Property damage – A swivel chair in a notary’s office has a wobbly wheel. When a client sits on it and pulls the chair closer to the desk, the wheel comes off, and he falls off it. His wrist hits the desk as he tries to break his fall, which he barely manages. However, the impact breaks his expensive designer watch into pieces, which also had great sentimental value. The notary’s General Liability insurance will respond to this third-party property damage claim.
Workers’ Compensation Insurance
This policy is for notaries who have employees. Most states require workers' compensation when an employer reaches a certain number of employees, but this coverage is recommended even if there is only one employee. Workers’ compensation pays for medical care costs and a portion of lost wages when an employee is unable to perform duties because of an on-the-job injury. In the unlikely event of a death occurring while on the job, statutory benefits are also paid to the employee's dependents. Each state determines the benefits to be paid in the event of a worker's compensation claim.
Example: An employee climbs a ladder while organizing a filing cabinet in the office. He loses his balance and falls from the ladder, fracturing his arm.
Commercial Auto Insurance
If the notary’s business owns a vehicle, this insurance is mandatory.
Example: If an accident occurs due to the notary's fault, this policy takes care of bodily injury liability lawsuits from the occupants in the other vehicle and property damage to the other car. There are many different coverages available under business auto, some are state required and some may not be. An agent is the best person to discuss the need for other coverage in your state.
Cyber Insurance
Notaries often keep a lot of confidential data about their clients—for instance, loan documents, social security numbers, phone numbers, copies of identification, and fingerprints. The notary can expect a lawsuit if the clients’ private data gets compromised via a breach or a cyberattack. That's because there is an underlying trust when a signer uses a notary's services. But sometimes, unforeseen events can damage people's trust, after which legal action can be taken.
Example: A notary leaves his laptop on the train with his high-net-worth clients' private information on the hard drive. Due to an oversight, the notary has not set up a password for his laptop or encrypted the data, compromising its privacy. He goes back to look for the laptop but can't locate it. The resulting lawsuit by clients has the potential to push the notary into bankruptcy. His Cyber Insurance policy will then address the suit.
Comprehensive Insurance Costs
To decide on the right insurance policies to protect a business, one must look at factors such as the business's revenue, the number of people it employs, its location, the number of outlets, and its claims history. The cost of the establishment's policies will be determined based on these factors. Any misstatements or omissions of relevant information by the client can lead to price variation or even declination or rescission of coverage.
Who Benefits?
A well-functioning business is ultimately in the interest of the general public, the business establishment, the owner, the employees running it, and the customers who visit its premises to make purchases or avail of its services. A good business insurance plan benefits all the stakeholders of the business.