Understanding Errors and Omissions Insurance for Notaries in 2024

Errors and omissions (E&O) insurance protects notaries from financial losses that may result from claims of negligent acts, errors, or omissions related to the performance of their notarial duties. With changes to notary laws and practices on the horizon for 2024, now is a good time for notaries to understand the ins and outs of E&O policies and how to determine the right coverage levels.

What is E&O Insurance, and Why is it Important for Notaries?

E&O insurance provides notaries with protection against the financial costs of defending themselves in a civil lawsuit related to allegations of notarial negligence, as well as any settlement or court-ordered damages that may result. It is considered a necessary expense for any working notary public, as the risks of legal claims are inherent to the job.

Without E&O insurance, notaries would be personally responsible for paying all legal fees, settlements, judgments, and damages out of their own pockets in the event of a successful claim against them. For most independent contractor notaries or small business owners, this type of financial exposure could potentially ruin them.

Purchasing an E&O policy helps transfer these risks to an insurance company. It provides peace of mind knowing that defense costs and damages, up to the policy limits, would be covered if a claim is filed alleging the notary failed to properly perform their duties according to state notary laws, procedures, and standard practices.

Notary Negligence – What Types of Claims Does E&O Cover?

E&O insurance is designed to protect notaries from lawsuits brought by third parties as a result of alleged negligent acts, errors, or omissions related to the performance of their notarial duties. Some common examples of negligence claims against notaries include:

Failure to Properly Identify Signers

The most frequently alleged error is failing to properly verify the identity of document signers using acceptable forms of ID or taking inadequate steps to confirm identity through personal knowledge.

Improper Notarization Procedures

Claims may involve not following proper procedures for notarizing, such as neglecting to attach seals/stamps securely, dating documents incorrectly, or recording erroneous details in notary journals or electronic records.

Incorrect Acknowledgment Wording

Using outdated, inaccurate, or ambiguous wording for notarial certificates and acknowledgments can potentially invalidate the document or misrepresent signer’s intent.

Failure to Ascertain Willing Participation

A notary may neglect to ensure that signers are willingly participating in transactions and not being coerced. Signers may later allege they felt pressured or defrauded.

Notarizing Fraudulent or Altered Documents

Fraudsters may use notarization by a careless notary to validate bogus paperwork. Not noticing obvious signs that documents have been tampered with poses a risk.

These are just some common types of negligence claims that E&O policies help defend against and pay damages for should a lawsuit arise from notarizing work. It covers both public and commissioned notaries.

E&O Limits, Deductibles & Other Policy Features

When researching E&O insurance plans, it’s important to compare policy features like coverage limits, deductibles, additional services, and costs. Here are some key considerations:

Coverage Limits

Typical per-claim limits range from $1-5 million but can be higher. “Aggregate” limits also cap total payments over the policy term. Choose adequate limits based on assets needing protection.

Deductibles

The deductible, or out-of-pocket amount paid per claim, varies greatly. Higher deductibles lower premiums but require more money upfront for each claim. Choose a deductible you’re comfortable paying multiple times.

Claims Assistance

Most reputable insurers provide a legal defense for notaries, either directly employing attorneys or appointing approved defense counsel. This saves notaries time and legal costs.

Loss Prevention Services

Many policies feature risk management training, referrals to expert witnesses, fraud alerts, and other resources to help notaries avoid claims altogether through enhanced practices.

Automatic Policy Renewal

“Continuous coverage” assures that renewal paperwork/payments are handled each term, avoiding gaps in protection between policies. However, rates may change annually.

Carefully comparing coverage specifics is key when selecting the right E&O policy for upcoming years as a notary. Choose a carrier with strong industry reputation, financial ratings, and experience defending notary negligence claims.

Factors Impacting E&O Insurance Rates

Underwriters analyze multiple factors to establish fair premium rates for each applicant’s risk profile and coverage needs. Here are some aspects impacting notary E&O insurance costs:

Years of Notary Experience

Newer notaries tend to pay higher rates, which typically decrease after gaining experience without claims being filed. Underwriters view tenured notaries as lower risk.

Number of Transactions

Notaries signing more documents per month face greater exposure to potential errors. Higher transaction volumes correlate to higher premiums in most cases.

Types of Services Offered

Certain notarial acts like loan closings, legal depositions, or mobile notary services involve more liability. Rates are adjusted based on the scope of duties performed.

Geographic Region

Living/working in highly litigation-friendly areas with a history of notary claims results in higher base rates across the board. Coastal states tend to have pricier policies.

Prior Insurance Claims

Notaries with past E&O claims on record are viewed as poorer risks and will pay penalty rates going forward until multiple claim-free years pass.

Carefully tracking all notarial acts and credentials and maintaining exemplary signing practices and records over the long run helps keep future E&O rates as low as possible for notaries. Proactive risk management is the best approach.

Changes to Notary Laws and Practices

Many states implement new notary legislation, regulations, and best practices on a periodic basis. Keeping abreast of proposed changes and ensuring adequate E&O coverage for emerging compliance areas is critical. Here are a few notable 2024 modifications to anticipate:

Digital/Remote Online Notarization Adoption

As more states legalize RON and DYN, notaries offering these tech-based services require specialized coverage inclusion riders added to E&O policies to stay protected.

Expanded ID Verification Options

Certain states plan to formally recognize additional forms of signer ID like passports, consular ID cards, or trusted referee verification in vulnerable signer situations. Notaries need policies covering the proper use of new ID rules.

Mandated Notary Modernization Training

Some legislatures enacted laws requiring all commissioned notaries to complete continuing education by certain deadlines on topics like proper RON, cyber security, and ADA compliance when remote notarizing to maintain commissions. E&O must cover liabilities from this updated training content.

Anticipating upcoming state compliance changes allows notaries to ensure any new mandated acts and procedures are unambiguously covered under their 2024 and beyond E&O policies. Keep a close eye on notary governing agency websites for proposed law overviews and updates.

Notary E&O FAQs

Here are answers to some frequently asked questions about notary errors and omissions insurance:

How much does E&O insurance for notaries typically cost?

Premiums can range from around $150-500 per year depending on the policy limits and deductibles selected, as well as individual risk characteristics. Most pay $200-350 annually for standard $1 million policies.

When should I raise or lower my E&O policy limits?

Higher transaction volumes, asset values at risk, or offering expanded notary services may warrant increasing limits. With experience and few transactions, lower liability risks could allow for lower coverage. Annual limit reviews help ensure adequate protection.

Should I purchase E&O coverage if I rarely notarize?

Even infrequent notarization holds risks. Since one claim could wipe out personal assets, buying a low-cost policy provides prudent protection for occasional notary side jobs or volunteer acts.

Is prior acts coverage important for experienced notaries?

Yes, this helps transfer liability for any potential retrospective claims regarding past notarial conduct within the statute of limitations period, which can last several years. It offers valuable protection during policy transitions or if lapsing coverage is temporary.

What are some additional professional liability policy riders to consider?

Common added coverage options include cyber liability, legal defense reimbursement, and full prior acts retroactive date recognition. Riders widen protection and ensure long-term comprehensive coverage tailored to individual exposures.

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