A notary public is an official appointed position by the Secretary of State’s office in a given state. Just like most public officials, the State requires that the person get a notary bond before getting their commission. This bond “makes sure” that when the notary violates the public trust through negligence of their duties, funds are available to indemnify the State for its loss.
The principal responsibility of notary publics is to confirm that the individual parties to a contract are who they claim to be. The State may suffer a loss if the notary neglects to properly validate the identity of the parties.
As a public official, the notary public violates the public trust by failing in their responsibility to confirm identity. If a Texas notary public doesn’t confirm identity and a loss occurs, an injured party can file a claim against that State for the loss, because the State was negligent through its appointed representative.
A surety bond is a promise to pay to the obligee (the State) when losses occur for a penalty amount of the bond. Surety bonds are usually provided by a surety company (typically an insurance carrier). The bond generally runs concurrently with the period of the notary’s commission.
You’re probably familiar with a property insurance policy. When a person has a rental property in Indiana loss, the insurance carrier pays the loss and writes off the loss. You aren’t required to reimburse the company for the damages. Unlike a property insurance policy however, a notary bond is simply a guarantee that the funds will be available if losses occur. The surety (insurance company) makes a payment to the State up to the penalty amount of the bond. However, this claim 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 Public Errors and Omissions and can also be purchased for a nominal fee from insurance companies.