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, Forbes Real Estate Council Member, and Best-Selling Author

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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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Why Would You Need Errors and Omissions Insurance if You Don't Plan on Making Mistakes? 

This is a great (and incredibly valid) question, especially because notary public loan signing agents take their business, professionalism, and attention to detail very seriously in this industry. 

So allow me to explain. 

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

Whether that wrongdoing is intentional or not. 

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. However, if you are found liable for a mistake that occurs during a loan signing appointment, you will need to pay whatever the judgment dictates as well as the legal fees needed to defend yourself.

This is why there is Errors and Omissions Insurance — also called E&O Insurance.

Errors & Omissions Insurance Will Pay the Costs of Any Claims or Lawsuits that Result 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, even if someone blames you for something you didn't do, you could still be faced with court costs for defending yourself. The beauty of Errors and Omissions coverage is that it would cover these costs for you. Meaning, nothing 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.

Talk about peace of mind!

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.

Another great thing about Errors and Omissions insurance is that it will cover the insured notary for un unintentional actions performed during the term of their policy, up to the policy limit. Always be sure to read your fine print, but you can rest assured knowing that most carriers will cover you while your policy was in place. For example, let's say an error occurred in 2010 and you had a policy at that time. But someone blames you for misconduct a couple years later in 2012, after your policy has already expired. It is not unusual for the E&O insurance companies to cover resulting claims presented after a policy's expiration date if you were covered while the error took place.

​However, there are a few misconceptions about this incredibly beneficial type of coverage...

Many Loan Signing Agents Believe 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, on the other hand, 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 between a notary bond and E&O insurance.

Understand that regular notary publics are not required by law to have E&O. But as a notary loan signing agent, it's an absolute must . It reduces your risk of being held liable for any financial loss or potential lawsuits that can result from mistakes that occur on your behalf.

And although it's not required for notary publics, know that 99% of escrow companies, title companies, and signing services do require it for notary loan signing agents.

Those are your biggest sources of business. 

So my recommendation is to get a $100,000 policy at a minimum. That is what most title companies prefer. Plus, it allows you go about providing your notary loan signing agent services nearly worry-free,  knowing that you'll never be on the hook for something you didn't do. 

Most E&O insurance carriers offer policies at this amount for around $20 a month or less — and for what you receive in exchange, I believe it is beyond worth it. 

If you found this information helpful, I'm stoked! There is so much more where that came from in my five star-rated Loan Signing System online training course for notary publics. Thousands of people across the nation are using my techniques right now to make hundreds or even thousands of extra dollars every month. 

I'm Mark, I teach Loan Signing System, and I look forward to giving you more tools just like this to help you build a successful, efficient, and lucrative notary loan signing business today!