A notary is an appointed position by the Secretary of State’s department in any state. As with most public officials, the State requires that the person obtain a surety or notary bond prior to getting their commission. This bond “makes sure” that if the official violates the public good through negligence of their duties, funds are available to reimburse the State for its loss.
The main responsibility of a notary public is to ensure that the individual parties to an agreement are who they say they are. The State may suffer a loss if the notary public fails to correctly confirm the identity of the parties.
As a public official, the notary causes harm to the public trust by failing in their responsibility to verify identity. If an Iowa notary public doesn’t verify identity and a loss occurs, an injured party might file a claim against that State for its loss, since the State was negligent through its appointed official.
A notary bond is a promise to pay 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 company). The bond often runs concurrently with the term of the notary’s commission.
You’re probably familiar with an auto insurance policy. If a person has an Indiana truck insurance loss, the insurance company pays the loss and writes off the loss. You aren’t required to reimburse the carrier for the damages. Unlike a car insurance policy however, a notary bond is simply a promise 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 company is not simply written off. The company 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 may also be obtained for a nominal fee from insurance carriers.