Mary Kate Kelley—Notary Errors and Omissions (E&O) Insurance is a good supplement to your notary bond as protection for the public, and it offers the only possible protection for you as a notary. If you are a notary signing agent, however, you should be aware that your notary E&O policy covers mistakes made only during notarial activities authorized by your state's Notary Public Law. Since these notarial duties make up less than five percent of the tasks involved in a loan signing, a lot of activity is left uncovered.
Also called Professional Liability Insurance, E&O protects professionals for losses or expenses resulting from claims of mistakes, errors or omissions committed (or alleged to have been committed) in the performance of professional activities. E&O policies are designed to cover specific activities performed within the scope of a particular profession. Healthcare workers, engineers and accountants are examples of professionals for whom E&O policies are easily obtained because the activities involved with each of these lines of work are clearly defined and regulated.
Signing agent E&O, on the other hand, may be difficult to find because the profession is relatively new, unregulated and often unrecognized or strictly prohibited in some states.
Notary signing agents (NSAs) are simply notaries who offer a convenience service. They take loan documents to the homes of borrowers, verify their identities, show them where to sign, notarize as required, and then deliver the executed documents to the appropriate entity. However, some NSAs go beyond these simple tasks and subject themselves to lawsuits by explaining documents, answering questions that should be referred to the lender, or calculating rescission dates.
If you are a notary signing agent who adheres to the Notary Public Law and all the regulations and laws governing real estate transactions, you may never find yourself part of a lawsuit. However, USNA is aware through contact with our members who are NSAs that some feel pressured by lenders or title companies to do more than they should, or they feel they must somehow "add value" to the services they offer in order to get more work. If this describes you, USNA strongly urges you to do everything you can do to protect yourself. Always keep in mind that you can be individually liable for violations of law and individual negligence.
- Review your coverage. A notary signing agent may be considered to be an agent for a lender, title company or signing service. Ask your contacts at the signing companies you have contracts with if you are covered by any business liability policies they may have. When negotiating contracts or fees with signing companies, make your risk and liability topics for discussion. Avoid the unauthorized practice of law. NSAs may not dispense legal advice, exercise legal judgment or reasoning, or offer any explanation of the documents the borrowers are signing. They may not provide any calculations or fill in any blanks on documents other than notary certificates. If the borrowers have any questions at all, NSAs must ask them to contact their lenders or attorneys.
- Keep accurate records. NSAs must keep careful records of all transactions they perform. Use a notarial register to record only notarial acts and the notarial fees authorized by law. Keep a separate log of loan signing fees you collect and the expenses you incur. If you record signing agent fees in your notarial register, you can be prosecuted for overcharging.
- Look into other professional liability policies. Particularly critical for anyone who provides professional services, these policies are designed to cover your financial losses in the event a customer suffers financially as a result of your error, omission or negligence and to meet the cost of your legal defense. Even if you are found innocent, the legal costs can be substantial.
An Internet search on "professional liability insurance" will result in hundreds of insurance companies that carry these policies. Many of these companies will offer quotes on policies for specific professions, but you will not find signing agents among them. So you need to have a policy customized to fit your needs. Look for a well-known, financially stable company, one that offers a miscellaneous E&O liability policy. Before you actually get a quote, chances are you will need to speak with an agent in person to discuss the details of the services you provide so that a policy can be designed for you.