A notary is an appointed position by the Secretary of State’s department in a given state. As with many public officials, the State requires that the individual obtain a surety or notary bond prior to getting the commission. This bond “makes sure” that when the notary violates the public trust through negligence of their responsibilities, funds are set aside to indemnify the State for its loss.
The primary responsibility of a notary public is to confirm that the individual parties to an agreement are who they claim to be. The State may suffer a loss if the notary forgets to properly validate the identity of the parties.
As a public official, the notary harms the public trust by failing in their responsibility to confirm identity. If a South Dakota notary public doesn’t confirm identity and a loss occurs, an injured party can file a claim against that State for their loss, because the State was negligent through its appointed representative.
A notary bond is a guarantee of payment to the obligee (the State) if losses occur for a penalty amount of the bond. Notary Public bonds are generally provided by a surety company (typically an insurance carrier). The bond usually runs concurrently with the term of the notary’s commission.
You may be familiar with a home insurance policy. When a person has a rental property in Indiana loss, the insurance company pays the loss and writes off the loss. You aren’t required to reimburse the company for the claim. Unlike a home insurance policy however, a notary bond is simply a guarantee that the funds will be available when 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 company 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 can also be obtained for a nominal fee from insurance carriers.