What is Errors and Omissions Insurance and Why Do Notary Loan Signing Agents Need It?

By Mark Wills - Course Instructor of the Loan Signing System and Forbes Real Estate Council Member

Errors and Omissions Insurance, also known as E&O Insurance, is liability coverage that is created to protect the signing agent’s personal and professional assets if a mistake is made during the notarial process that causes the client to suffer financial loss.

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So the question is, why do you need errors and omissions insurance if you don't plan on making mistakes?

The first thing to understand is that signing agents are notary publics first and foremost and can be held personally liable for the full amount of damages caused by any wrongdoing that happens.

As a notary public loan signing agent, there are a lot of mistakes that can be made accidentally. Frankly, it's why we get paid so much money. But if you are found liable for your mistake, you will need to pay whatever the judgment dictates as well as the legal fees to defend yourself.

This is why there is Errors and Omissions Insurance.

Errors and Omissions Insurance will pay the costs of claims and lawsuits resulting from your unintentional errors, up to your policy limit. So, if you have a $100,000 policy, it will cover you up to $100,000. Not only will E&O Insurance pay out damages to an injured party after a court verdict or out-of-court settlement, but it will also pay your attorney’s costs, court costs, and other defense costs up to your policy limit.

Remember, if someone blames you for something you didn't do, you could still be faced with court costs for defending yourself. And the beauty of Errors and Omissions coverage is that they would cover these costs for you. It would not come out of your pocket.

If the claim is legitimate, your policy will pay for your damages and legal expenses up to your policy limit.

E & O Insurance is like car insurance: when you need it, you will be glad you have it. And like car insurance, it will cover your personal assets, even if you are falsely accused of wrongdoing.

In conclusion, Errors and Omissions Insurance will cover the insured notary for unintentional actions performed during the term of their policy, up to the policy limit. Make sure to read your fine print but most policies will cover you while your policy was in place. So let's say an error occurred in 2010 and you had a policy at that time. But someone blames you for misconduct in 2012 and your policy already expired. It is not unusual for the policy to cover resulting claims presented after its expiration date if you were covered while the error took place.

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The biggest myth signing agents believe is that their state-required notary bond acts like E & O Insurance. It does not. The Notary bond protects the public. If the surety company makes a payment on your claim, you are required to pay them back.  E&O Insurance pays your claim and legal expenses up to your policy limit — you don't have to pay a deductible and you don't pay them back for the claim. The state-required surety bond protects the public you are working for, not you. That is the difference.

E & O insurance is not required by law to have as a notary public. But as a signing agent, I think you can now see why it's imperative to have. It is there for you to reduce your risk and avoid the financial loss that comes with a potential lawsuit.

However, while it is not required to have as a notary public, 99% of escrow companies, title companies, and signing services do require it.

My recommendation is that you get a $100,000 policy at a minimum. That is what most title companies prefer. Plus, it gives you the most peace of mind.

The cost is about $20 per month, more or less.

I'm Mark, I teach the Loan Signing System, and I look forward to helping you make money as a loan signing agent!

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