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Most states legally require that notary publics have a notary bond which is a type of surety bond that ensures they are licensed in their state, which means they can legally approve and witness signatures on documents, as well as administer oaths in depositions. 

So what is a notary bond exactly and how does it work? Keep reading to find out.

What is a Notary Bond?

While it isn’t required in every state, most states do legally require that notary publics buy and maintain a notary bond in order to be able to work. The state acts as the obligee, which is the government agency that required the bond. 

A notary bond helps protect the public from mistakes such as misconduct and fraud that notaries can make while performing their job duties. If someone needs to take an oath or needs to have a document notarized, a notary bond can provide them with an extra layer of protection. 

It’s easy to confuse notary bonds with notary errors and omissions insurance (a form of E&O insurance). While notary E&O insurance provides protection for the notary public (for mistakes that are unintentional), a notary bond protects the consumer from the notary public services. You can purchase notary bonds from an insurance company, but again this isn’t a form of insurance for the notary. 

How Do Notary Bonds Work?

Legally, in most states a notary public is required to buy a notary bond in order to practice their line of work. If the notary public does end up making a mistake that leads to their customer facing a financial loss, the customer can file a claim against the notary bond. 

Let’s look at an example of how this can work. 

Robert needs a new car and his neighbor Susan has a car she’s looking to sell. Susan agrees to sell the car to Robert. Robert is ready to pay Susan and to drive away in his new car, but first they need to have a notary public notarize their signatures on the transfer of the car title to make it official. To do this, the notary will request both parties present their driver's license in order to confirm their identities. Unfortunately, Susan says she forgot her driver's license at home. Because Robert trusts Susan and is in a hurry, they both sign the paperwork anyways and the notary then notarizes their signatures. The problem? The car didn’t actually belong to Susan, it belonged to her elderly mother who did not want to sell her car.

Susan’s mother can now file a claim against the notary bond, as the notary made a major mistake by not identifying that Susan wasn’t the owner of the car. A claim can be filed against the state this occurred in as that state is considered negligent through its appointed representative. 

If the claim against the bond is approved, the notary public will be required to repay the surety company (the company that issues the bond) for the claim they paid out. 

All surety bonds are made up of three different parties:

• Principal. The party that must take out the bond—aka the notary public.

• Obligee. The party that requires the bond—the state government in the case of notary bonds.

• Surety. The company that issues the notary bond and ensures that the principal fulfills the contract. They will pay out any approved claims initially, but the principal will need to pay them back.

How Much Do Notary Bonds Cost?

How much notary bonds cost can vary depending on what state the notary public practices in and how high their personal credit score is. In some states, notary bond amounts can be as little as $1,000. In other states, they can be as much as $15,000. Usually, notary bonds cost a small percentage of the bond amount. You can expect to pay about $30 to $100 to secure a notary bond. 

To better understand how notary bond pricing works, it helps to know what the following terms mean.

• Bonding capacity. The maximum amount a principal can claim. If the maximum bonding capacity is $10,000 then the obligee can’t claim more than $10,000.
• Bond premium. This represents how much the principal will spend on the bond and is typically $30 to $100
• Bond term. Bond terms represent how long the surety bond is active.

Want a better idea of what a notary bond will cost you? You can get a free online quote today by completing a simple application or by calling 888-518-8011. Our experts will walk you through our quick and easy process. 

Learn more about your notary bonds with Worldwide Insurance Specialists, Inc. today!