A notary is an appointed position by the Secretary of State’s office in a given state. Just like many public officials, the State specifies that the person obtain a notary bond prior to receiving their appointment. This bond “makes sure” that when the notary violates the public trust through neglect of their duties, funds are set aside to indemnify the State for its loss.
The principal duty of notaries public is to validate that the individual parties to an agreement are who they claim to be. The State may suffer a loss if the notary neglects to properly validate the identity of the parties.
As a public official, the notary public harms the public trust by failing in their responsibility to confirm identity. If a Wisconsin notary public doesn’t confirm identity and a loss occurs, an injured party can file a claim against that State for their loss, because the State was negligent through its appointed representative.
A notary bond is a guarantee of payment to the obligee (the State) should 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 often runs concurrently with the term of the notary’s commission.
You’re probably familiar with a homeowners insurance policy. When a person has an Indiana home insurance loss, the insurance carrier pays the loss and writes off the loss. You aren’t required to reimburse the company for the damages. 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 company 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 Errors and Omissions and can also be purchased for a nominal fee from insurance companies.