07/28/2019
Good Morning,
I was asked by Liz Head to share a post I made in another Facebook Group. It deals with notary liability insurance - , .
I'm a licensed insurance agent in Texas, Alabama, Indiana, Florida, Georgia, Mississippi and Tennessee. I specialize in Notary Public Liability Insurance. I'm also an Alabama Notary Public, and Notary Instructor.
A notary was getting ready to renew her commission and asked for tips/suggestions. She stated she was going to purchase a $1M E&O Insurance Policy. I was surprised by some of the comments that were made by other notaries so I chimed in. You may find some of these suggestions helpful to you.
1. It's best for you to purchase E&O policy with dates of coverage (start & end date) that match your notary commission start & end date. I don't purchase one-year E&O policies because eventually, I'll renew a few days too early or a few days too late. You DO NOT want gaps in your E&O coverage Never. Ever. Every day matters. You also don't want to pay for double coverage. In those situations (when policy dates overlap), only one policy will pay, not both. I think some insurance companies will allow you to purchase coverage for only one year, to make it easier on the notary, but I don't encourage it.
2. Not all E&O policies are alike. If you see that the premium for one E&O policy is higher than another, there's a reason for it. You need to find out why. Ask questions. Request a side-by-side comparison from the insurance agent so that you can see how the policies differ. Maybe extra benefits (riders) have been added. Maybe the insurance agent is receiving a higher commission. There could be exclusions & limitations which means certain things are not covered.
3. If you have a good relationship with an insurance agent for your homeowners, life, auto insurance, ask him/her if they can issue your notary bond and E&O. Why? You might be entitled to a discount for adding an additional policy. However, a word of caution, if your agent isn't familiar with this type of coverage then you may want to go with someone who is.
4. $25,000 of Notary E&O Insurance is not enough protection for most notaries. I don't fault the NNA for suggesting this amount. Let's be honest. If the NNA hadn't encouraged us to purchase E&O most of us wouldn't have bought anything at all. Some insurance is definitely better than no insurance. I also think the NNA suggested that amount years ago. Things have changed since then - costs have increased; not decreased.
The reason why I am of the opinion that $25,000 is not enough protection for most notaries is because an E&O policy is expected to pay: attorney fees; settlements and judgment awards; court costs; and legal expenses. (Do you see where I'm going with this?) Keep in mind that even if you're innocent of what you're being accused of you're still going to need to defend yourself in court.
In my home state, the majority of the commercials on TV are from prescription drug companies and law firms. A person who feels they've been harmed/wronged by a notary public can quickly and easily hire a lawyer who will represent them. This would help to explain why we're hearing more about notaries being sued, and why notary legal expert, Michael Closen, states that he's seeing cases with higher award amounts.
5. So...how much E&O should you purchase? That's not an easy question to answer. I honestly believe that this is a question every notary needs to answer for him/herself. I will say that if you are an active notary - performing notarizations regularly - you should purchase at least $100k of Notary E&O. Those of you who have $200k; $500k and $1M policies, kudos! That's excellent protection. You are reducing the changes that someone will come after your personal assets: home, cars, boats, collections, anything of value as allowed by law. If you can't afford $100k now, then purchase $50k now. Remember, something is better than nothing.
6. Signing Agents if you want full protection, you must purchase Signing Agent E&O in addition to your Notary E&O policy. They are very different policies. Signing Agent E&O is more expensive because it excludes typical notary acts, and covers those other things, for example:
missing short-to-close funds; missing initials and signatures; lost documents, etc. I used to think it didn't matter. I used to thinking Signing Agent E&O was "nice to have," but not necessary. I was wrong.
7. Finally, if you don't buy E&O and someone you notarize for gets mad at you for it. They don't have to sue you to get money from you. All they have to do is file a claim with your Notary Bond company. The person has to convince the Bond Company that you did something that caused them harm. If the Bond Company approves the claim they will send a check to the person and then send you the bill. You are required to reimburse the Bond Company...quickly. You can do that by cash/personal check/credit card.
I'm going to stop here. I tend to get carried away when I talk about this stuff. If you have any other questions, let me know. You can tag me in your posts about notary liability and I'll do my best to answer. I can offer professional advice and insurance quotes to those of you who reside in the states where I am licensed. You can also find me on my website: TheBondLady.org.
Thank you, Liz, for giving me the opportunity to share with your group members.
Business Owners - Notaries - Process Server - PI's - and More Alabama - Georgia - Indiana - Mississippi - Texas - Tennessee
