A notary is an appointed position by the Secretary of State’s office in a given state. As with many public officials, the State requires that the individual obtain a notary bond prior to getting their commission. This bond “makes sure” that when the notary violates the public trust through negligence of their duties, finances are set aside to indemnify the State for its loss.
The primary duty of notary publics is to ensure that the individual parties to an agreement are who they claim to be. The State may suffer a loss if the notary public forgets to properly validate the identity of the parties.
As a public official, the notary public violates the public trust by failing in their duty to confirm identity. If a New York notary public doesn’t confirm identity and a loss occurs, an injured party can file a claim against that State for its loss, because the State was negligent through its appointed representative.
A surety bond is a promise to pay to the obligee (the State) if losses occur for a penalty amount of the bond. Notary bonds are usually provided by a surety company (typically an insurance carrier). The bond often runs concurrently with the term of the notary’s commission.
You may be familiar with a property insurance policy. When you have a property insurance in Indiana claim, the insurance company pays the claim and writes off the loss. You aren’t required to reimburse the carrier for the claim. Unlike a home insurance policy however, a notary bond is simply a promise that the funds will be available when losses occur. The surety (insurance company) pays the State up to the penalty amount of the bond. However, this loss paid by the surety is not simply written off. The surety 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 Public Errors and Omissions and may also be purchased for a nominal fee from insurance companies.