5.3 The $10,000 Bond, Liability of Notary, Surety & Employer, and E&O Insurance
Key Takeaways
The bond is $10,000, issued by a licensed Missouri surety for the four-year commission term, payable to any person and conditioned on the notary's official misconduct (Section 486.615.1).
A notary is liable to any person for all damages proximately caused by the notary's negligence, intentional violation of law, or official misconduct in a notarization (Section 486.805.1).
The surety's aggregate liability never exceeds the bond amount, no matter how many claimants or notarial acts are involved (Section 486.805.2).
An employer is liable if it directed, expected, encouraged, approved, or tolerated the notary's misconduct, and is liable to the notary for coerced violations and for retaliation (Section 486.805.3-4).
Errors and omissions insurance is optional and protects the notary, but it does not replace the required bond.
Students often treat the bond as the notary's insurance. It is not. The bond protects the public, liability rests on the notary, and errors and omissions (E&O) insurance, if the notary buys it, protects the notary.
Official Misconduct
Liability and bond claims turn on official misconduct, defined in Section 486.600(14) as:
- (a) a notary's performance of any act prohibited, or failure to perform any act or duty mandated, by Chapter 486 or any other law in connection with a notarial act; or
- (b) a notary's performance of an official act or duty in a manner that is negligent, contrary to established norms of sound notarial practice, or against the public interest.
The Bond (Section 486.615)
| Feature | Rule |
|---|---|
| Amount | $10,000 |
| Issuer | A licensed Missouri surety |
| Term | Four years, from the commission's issue date to its expiration date |
| Beneficiaries | "Any person," with payment conditioned on the notary's official misconduct |
| Claims reporting | The surety reports all claims against the bond to the Secretary |
| Exhausted bond | The Secretary suspends the commission until a new bond is obtained and the notary's fitness for the rest of the term is decided |
The handbook stresses that the notary bond is separate from, and in addition to, any other bond coverage the notary has. Like other surety bonds, it is a guarantee to the public rather than coverage for the notary, and sureties generally require the notary to reimburse any claim they pay.
Who Is Liable, and for How Much (Section 486.805)
| Party | Liability | Limit |
|---|---|---|
| Notary | To any person for all damages proximately caused by the notary's negligence, intentional violation of law, or official misconduct in relation to a notarization (486.805.1) | No statutory cap |
| Surety | To any person for damages proximately caused by the same conduct during the bond term (486.805.2) | The bond amount (or whatever remains after other claims), in the aggregate, regardless of the number of claimants or acts |
| Employer | For damages caused by the notary's negligence, violation of law, or official misconduct during employment, if the employer directed, expected, encouraged, approved, or tolerated it, in the particular transaction or impliedly through at least one similar earlier transaction involving any notary it employs (486.805.3) | No statutory cap |
Protections for the Notary
- An employer is liable to the notary for all damages recovered from the notary for a violation of law that the employer coerced by threat (such as demotion or dismissal), and for damages caused by demotion, dismissal, or other action taken because the notary refused to violate the law (Section 486.805.4).
- "Negligence" does not include a good-faith determination that the principal appeared to understand the transaction or appeared to act freely (Section 486.805.5).
- Recovery requires that the notary's conduct be a proximate cause of the damages, though not necessarily the sole cause (Section 486.805.6).
- These rules apply equally to electronic and remote online notaries (Sections 486.805.7 and 486.1000).
A Worked Example
A notary carelessly accepts an obviously altered ID and notarizes a forged deed. Three buyers and lenders suffer losses of $6,000, $8,000, and $11,000, a total of $25,000.
The surety's aggregate exposure is $10,000 across all three claimants. The notary is liable for all damages proximately caused, so the remaining $15,000 can be pursued against the notary personally. The surety will usually seek reimbursement of what it paid, and the Secretary will suspend the commission if the bond is exhausted.
Errors and Omissions Insurance
The handbook explains: "An errors and omissions policy does not replace a bond. An errors and omissions policy is not required by law, but may be purchased as it protects the notary public and pays for any charges the notary might owe for legal fees and costs should the notary be sued."
| Question | $10,000 bond | E&O policy |
|---|---|---|
| Required by Missouri law? | Yes | No |
| Who is protected? | The public | The notary |
| Pays legal defense costs? | No | Typically yes, within policy terms |
| Can it substitute for the other? | No | No |
Criminal and Administrative Exposure
Civil liability is separate from criminal penalties under Section 578.700 and from revocation or suspension by the Secretary (Sections 486.810-486.825). Section 486.825 states that the chapter's sanctions do not preclude any other sanctions or remedies provided by law.
Exam Scenarios
- Supervisor pressure. A manager tells an employee notary to notarize a signature without the signer present, or lose her job. The notary refuses and is demoted. The employer is liable to the notary for damages caused by the demotion (Section 486.805.4).
- Good-faith judgment. A notary carefully questions an elderly signer, who appears to understand the deed. A relative later claims the signer was confused. The notary's good-faith determination is not "negligence" under Section 486.805.5.
- Bond versus E&O. A notary sued for a mistaken certificate has E&O coverage. The E&O insurer may provide a defense, but the notary still needed the $10,000 bond to be commissioned.
A notary's misconduct on one forged deed causes three claimants losses totaling $25,000. What is the surety's maximum total liability under Section 486.805 RSMo?
$10,000 for each of the three claimants
Nothing, because the bond protects only the notary
$25,000, the full amount of the losses
$10,000 in the aggregate for all claimants
Under Section 486.805 RSMo, when is an employer liable for damages caused by an employee notary's official misconduct?
Never, because only the notary and surety can be liable
When the employer directed, expected, encouraged, approved, or tolerated the misconduct
Only when the employer is itself a commissioned notary
Only if the employer paid for the notary's surety bond
How does errors and omissions insurance relate to the required $10,000 bond?
E&O is optional coverage for the notary and does not replace the bond
E&O may be bought instead of the bond if the policy limit is at least $25,000
E&O is required by law in addition to the bond
E&O and the bond both protect only members of the public
Sections you finish are checked off in the contents.