Notaries are public officials
A notary public is an official appointed position by the Secretary of State’s department in a given state. As with most public officials, the State requires that the individual obtain a surety bond prior to receiving their appointment. This bond “makes sure” that when the official violates the public trust through neglect of their responsibilities, funds are set aside 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 experience a loss if the notary public neglects to properly confirm the identity of the parties.
As a public official, the notary public causes harm to the public trust by failing in their responsibility to confirm identity. If a Colorado 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 notary bond is a guarantee of payment to the obligee (the State) when losses occur for a penalty amount of the bond. Notary Public bonds are generally provided by a surety company (typically an insurance carrier). The bond usually runs concurrently with the term of the notary’s commission.
You’re probably familiar with a home insurance policy. When you have a property insurance in Indiana loss, the insurance company pays the loss and writes off the loss. You aren’t required to reimburse the company for the claim. Unlike a home insurance policy however, a notary bond is simply a guarantee that the funds will be available when 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 companies.