Notaries serve a valuable role
A notary is an official appointed position by the Secretary of State’s office in any state. Just like many public officials, the State requires that the person get a surety or notary bond before getting the commission. This bond “makes sure” that if the official violates the public trust through negligence of their duties, funds are available to indemnify the State for its loss.
The main duty of a notary public is to validate that the individual parties to a contract are who they say they are. The State can suffer a loss if the notary forgets to properly ensure the identity of the parties.
As a public official, the notary public harms the public trust by failing in their duty to validate identity. If a South Dakota notary public doesn’t verify identity and a loss occurs, an injured party can file a claim against the State for its loss, since the State was negligent through its appointed official.
A notary bond is a guarantee of payment to the obligee (the State) when losses occur for the penalty amount of the bond. Notary Public bonds are often provided by a surety company (typically an insurance carrier). The bond generally runs concurrently with the term of the notary’s commission.
You may be familiar with a car insurance policy. When you have an Indiana auto insurance claim, the insurance company pays the claim and writes off the loss. You aren’t required to pay back the carrier for the claim. Unlike a car insurance policy however, a notary bond is simply a promise that the funds will be available if a loss occur. The surety (insurance company) pays the State up to the penalty amount of the bond. However, this loss paid by the carrier is not simply written off. The company will most likely seek reimbursement from the bonded person, 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 may also be obtained for a nominal fee from insurance companies.