A notary public is an official appointed position by the Secretary of State’s department in a given state. As with many public officials, the State specifies that the individual obtain a notary bond prior to getting their appointment. This bond “makes sure” that when the notary violates the public trust through neglect of their responsibilities, funds are set aside to indemnify the State for its loss.
The principal duty of a notary is to confirm that the individual parties to a contract are who they claim to be. The State may experience a loss if the notary public neglects to properly validate the identity of the parties.
As a public official, the notary public violates the public trust by failing in their duty to confirm identity. If a North Carolina 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 bonds are usually provided by a surety company (typically an insurance carrier). The bond usually runs concurrently with the period of a notary’s commission.
You’re probably familiar with a homeowners insurance policy. If you have a property insurance in Indiana loss, the insurance company pays the claim and writes off the loss. You aren’t required to reimburse the carrier for the claim. Unlike a homeowners insurance policy however, a notary bond is simply a promise that the finances will be available should losses occur. The surety (insurance company) makes a payment to the State up to the penalty amount of the bond. However, this loss paid by the surety is not simply written off. The carrier will most likely seek reimbursement from the bonded party, 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 Errors and Omissions and can also be purchased for a nominal fee from insurance carriers.