The Ins & Outs of E&O: Understanding Errors & Omissions

Find out the ins & outs of errors and omissions

Many of our customers purchasing their notary bond are confronted with the question of whether or not to purchase what is called errors & omissions insurance. Unlike obtaining a surety bond, getting errors and omissions coverage is not required by the state and is entirely up to the notary. Although it is cheaper up front to purchase a bond without E&O, the cost to cover a claim against a notary without it may far outweigh the initial savings. Therefore, we believe it is in the best interest of every notary public to have a thorough understanding of this essential coverage prior to making the decision of whether or not it should be included with their surety bond.

What is errors & omissions coverage?

Errors & Omissions is a type of professional liability insurance that protects notaries from mistakes resulting in financial loss by the customer. If a customer makes a claim for damages against a notary bond, errors & omissions insurance will protect the notary’s assets up to the chosen coverage amount. Without errors & omissions, notaries are personally liable for damages caused by a mistake made while acting as a notary, which is why this coverage is so essential. It is also important to note that errors and omissions does not cover mistakes deemed to be intentional in nature, as any policy protecting against deliberate misdeeds may further encourage such misdeeds.

Although errors and omissions insurance is not required, it is highly recommended due to the nature of the work performed by notaries and the possibility of a claim arising. Errors & omissions insurance protects notaries up to the maximum amount of coverage they have selected, meaning they haze zero financial liability so long as the damages are within the limit of coverage. For example, if the notary purchases a policy capped at $15,000 and the plaintiff is seeking damages of $20,000, they will be responsible for $5,000 of the claim while the other $15,000 is covered by the E&O insurance. To minimize the out-of-pocket cost of a claim, the amount of coverage is something that should be carefully considered when purchasing errors and omissions with a bond.

Do surety bonds protect notaries?

A common misconception about surety bonds is that they offer protection for the person who buys the bond, also known as the principal. In reality, surety bonds are meant to protect the obligee requiring the bond from damage caused by the principal’s failure to adhere to the terms of the bond. If someone makes a claim against a notary’s bond and the surety pays out money to settle that claim, they will then look to the notary to personally reimburse them for all money paid out. For this reason, including Errors & Omissions coverage is highly recommended when purchasing a notary bond.

If an employer requires someone to become a notary, does their liability insurance cover losses?

In some instances an employer will have adequate insurance to protect a notary, but this is more of an exception than the norm. To avoid potential loss at a later date, notaries should inquire with their employers as to whether they are covered prior to foregoing errors and omissions coverage.

Where does a notary get errors & omissions insurance?

SuretyBonds.com is proud to offer multiple errors and omissions coverage options with every notary bond, allowing our customers to tailor the coverage to fit their unique needs. The majority of these policies may be purchased instantly online using our secure bond checkout. Have questions? Give us a call at 1 (800) 308-4358 or select your state to find out more about the notary bond and E&O coverage you need!

 

About the Author

Lindsey Jenkins
Lindsey Jenkins is a member of the marketing team at SuretyBonds.com. She writes about new legislation pertaining to the surety bond industry along with other surety bond news.