Posted by Harry [NR] on 5/17/07 9:15pm
Msg #190710

$100,000 E&O - Have you been told you need it?

In our recent newsletter, I stated that "...many companies are now requiring signing agents to carry a minimum of $100,000 in Notary E&O Insurance insurance." This comments was based on our personal observations, many third-party observations, and, if I remember correctly, at least one communication from a major title company asking that all signing agents obtain $100,000 E&O, preferably through NNA.

In response to this newsletter, we have received one complaint from a member who says they have contacted numerous signing services and title companies, and none have a $100,000 E&O requirement. Not only that, but he called NNA to ask whether some companies are requiring $100k E&O per the Notary Rotary newsletter. He was told, essentially, "What? That's absurd. We don't know what you're talking about. No one is requiring $100,000 E&O."

Does anyone care to comment? Have you been told by a signing service or title company that you need a minimum of $100,000 in E&O to work for them?

Thanks in advance for the feedback!

Harry
Notary Rotary

P.S. Here is a link to the newsletter: http://www.notaryrotary.com/news/200705/200705-NRI-News.htm. We now have E&O available in 45 states - the others are on the way!

Reply by NCLisa on 5/17/07 9:25pm
Msg #190713

There is one company

but the are asking for liability insurance which includes E&O, not notary E&O. The type of policy that attorney's, settlement companies and title abstractors have. They want to be able to assign blame to the Signing Agent, not the "Notary Public." The kind of insurance that runs about $2500 a year.

Reply by eboughey on 5/17/07 9:29pm
Msg #190714

Nobody yet

I've never been asked for E&O insurance but so many of my calls are last minute that they don't have the luxury of making that requirement.

Reply by Harry [NR] on 5/17/07 10:04pm
Msg #190721

Re: There is one company

We've been looking at offering something like that. You are right, though, it is extremely expensive. While we expect there is a lot of interest in E&O for Witness Only Closers, I don't think many signing agents have an appetite for coverage that runs about $2000/year, especially given the trends of higher costs and lower fees due to increased competition. (We're receiving more reports of NNA e-mails and bulk saturation mailings designed to drive memberships and increase signing agent numbers. I feel really bad for those of you who are trying to make a living at this.)

Harry
Notary Rotary

Reply by Becca_FL on 5/17/07 11:05pm
Msg #190735

Re: There is one company

Hi Harry,

I work for TCs that do require at least $35K in E&O. I have never been asked to have $100k, but I do carry it. There is one lender, that I know of, that requires at least a $500k policy and most of their deals go through SSs that have a Million dollar policy. My group has looked into personal/business liability policies and we have found that the premium is based on the type of business that you run. Premiums start at around $1000+ per year.

Reply by AJ_in_CA on 5/17/07 9:32pm
Msg #190715

I've been asked by three major title companies if i carried $100,000 in E&O ins. I decided based on those requests to go ahead and get that amt., assuming that if asked in the future by others, i would already have it. I've never been asked by a SS.

Reply by Jon_PA on 5/17/07 9:41pm
Msg #190717

I have been asked if I had $100,000 once and $500,000 once in the last three months by two different title companies.

Reply by jba/fl on 5/17/07 9:49pm
Msg #190718

Yes, by one company who took me out of their database. They have a sister company who uses me though.
Another asked, I argued, said couldn't use me anymore, still call.
One other wants $1M insurance (bond? E&O?) and when I called SS to say I did not have that amt. they said they would cover under their ins. Whatever...

Reply by jba/fl on 5/17/07 10:07pm
Msg #190723

And I will not be upping my coverage. I don't think, unless I am involved in LSD and other commercial signings (which would be purchase anyway, so liability extremely limited) that I could ever go above my current coverage anyway. Just another way to nickel & dime us to death.
I think I will sell snow cones on the corner....it's hot enough..and slow enough!

Reply by BrendaTx on 5/17/07 9:59pm
Msg #190720

What's absurd is that anyone would take the time to write you that complaint and quote the NNA as their basis, IN MY OPINION.

Yes, there is a perceived need for $100,000 E&O. Yes, I have been asked for it. When I did not have it they waived the requirement.

Reply by Harry [NR] on 5/17/07 10:06pm
Msg #190722

Well, yes, in that respect, it's a bit like background checks. Companies will ask for it or even demand it until they're in a real bind. Then they let it slide...

Reply by Signing_Doc on 5/17/07 11:04pm
Msg #190734

Old Republic in Las Vegas NV requires it of outside signing

agents...also, I believe Equity Title and First American Title Co (FATCO) of Las Vegas NV

Reply by Kari Schaffner on 5/17/07 10:08pm
Msg #190724

Yes - I have been told by at lesat 2 title companies that they require 100,000 E&O and I did have to provide proof.

Reply by Joan Bergstrom on 5/17/07 10:40pm
Msg #190729

I have $100,000 E & O for 4 years and I don't think I have gotten one job from having this amount. Its my personal comfort level because I own a home etc. No one has ever mentioned it or required it.
If you can afford this amount and you have assets you might want to consider this amount.

I do think you need $15,000 E & O to get hired in our industry, because so many companies ask us to put our E & O insurance # on an application; just an opinion. Not sure if I am right on this.

Reply by Susan Fischer on 5/17/07 10:51pm
Msg #190732

Not in the last year or so. I seem to remember a while

back a request or two - to which I said that since the E & O only covered my notarial acts, that $50K was plenty for me, as it was my business decision, since it was my petutie on the line for my actions and I'm not a criminal, that requiring more was over the top.

I could be wrong here, but notary E & O would not apply to a signing agent's contracted duties outside of notarizations. Can a company dictate the amount of personal insurance I carry as a notary? Can they dictate the amount or type of auto insurance I carry?

And on a related issue, question: Since Oregon doesn't require a bond, which would protect the public, and perhaps the contracting party, can another company require Professional E & O of NSAs when state law does not require a bond? And if they could, what risks are being insured against?

If yes, and if, as an industry standard the professiona E & O becomes a requirement, then I'm sure going to have to raise rates to pay for that requirement. <g> But, two big 'ifs.'

Will be renewing in AUG right here, thank you, Harry. So glad to be rid of the bad place.

Cheers!
Susie

Reply by SDgirl_CA on 5/17/07 11:56pm
Msg #190742

In my area, Chicago Title and First American require E&O $100,000 minimum!

Reply by hcampersFL on 5/18/07 12:01am
Msg #190744

What I've been told or rather asked is do I have E&O and if so how much is the policy? I do have it and I carry $100,000. For me it was a decent price for one year. So I went ahead and made the purchase.

Reply by Signing_Doc on 5/18/07 12:27am
Msg #190746

I had mine through XYZ and it is not transferable to Arizona

therefore I will need to get gnu insurance through you Harry...once I start getting some signings under my belt in Mesa/Phoenix AZ (hint hint)

"Doc"

Reply by Joe Ewing on 5/18/07 1:16am
Msg #190751

Has anyone ever read their e&o policy?

Can someone for example find the part of this policy that covers liability as a Notary Signing Agent? I see ONLY coverage for damages caused by errors while completing Acknowledgments and Jurats. The fines imposed by the SOS ($750) for failure to complete or failure to give the oath are excluded. Also can someone explain to me how a Notary can be sued for an omission?

E&O policy

INSURANCE COMPANY ('the Company') will pay on behalf of NOTARY PUBLIC NAME of NOTARY PUBLIC CITY AND STATE (''the Insured''), all sums, subject to the Limit of Liability stated below, which the Insured shall become obligated to pay by reason of liability for breach of duty while acting as a duly commissioned and sworn Notary Public, claim for which is made against the Insured by reason of any negligent act, error or omission, committed or alleged to have been committed by the Insured, arising out of the performance of notarial service for others in the Insured's capacity as a duly commissioned and sworn Notary Public. The Company will also pay on behalf of the Insured, subject to the Limit of Liability stated below, costs and expenses incurred in investigating, defending or settling the Insured's liability arising from any negligent act, error or omission, committed or alleged to have been committed by the Insured, arising out of the performance of notarial service for others in the Insured's capacity as a duly commissioned and sworn Notary Public.

POLICY PERIOD: This policy applies only to negligent acts, errors or omissions which occur during the policy period and then only if claim, suit or other action arising therefrom is commenced within the applicable statute of limitations pertaining to the Insured. The Policy Period commences on the Effective Date hereof and terminates upon the Expiration Date hereof.

LIMIT OF LIABILITY: The liability of the Company shall not exceed in the aggregate for all claims, costs and expenses under this policy the amount of X THOUSAND and 00/100 (X,000.00) Dollars.

THIS LIMIT OF LIABILITY INCLUDES COSTS AND EXPENSES INCURRED IN INVESTIGATING, DEFENDING OR SETTLING LIABILITY. ONCE THE LIMIT OF LIABILITY STATED ABOVE HAS BEEN PAID, WHETHER BY SETTLEMENT OF A CLAIM OR CLAIMS, OR BY PAYMENT OF COSTS AND EXPENSES, THE COMPANY IS RELIEVED OF ANY FURTHER DUTY TO DEFEND OR INDEMNIFY THE INSURED UNDER THIS POLICY.



CONDITIONS PRECEDENT: As a condition precedent to the right of indemnification or defense hereunder, the Insured shall mail or deliver to the Company within ten (10) days after notice or knowledge of a claim or possible claim against the Insured copies of any written notice thereof and a complete description of the facts and circumstances alleged to give rise to such claim. Bankruptcy or insolvency of the Insured shall not release the Company or its liability hereunder.

EXCLUSIONS: Coverage under this policy does not apply to any (i) dishonest, fraudulent, criminal, libelous, slanderous or malicious act or omission of the Insured; (ii) willful or intentional disregard of the law; (iii) bodily injury to, or sickness, disease or death of any person, including but not limited to, emotional or mental distress and related conditions; (iv) injury to or destruction of any tangible property, including the loss of use thereof; (v) fines or penalties imposed by law on the Insured; or (vi) punitive, treble, exemplary or similarly categorized damages, including fines and penalties.

Reply by Harry [NR] on 5/18/07 2:37am
Msg #190754

You raise an extremely important point: Notary E&O Insurance ONLY covers notarial acts (and omissions) performed (or neglected) by a duly commissioned notary provided there is no criminal intent by the notary. It will NOT COVER many other things you could potentially be sued for in connection with your role as a signing agent. One example would be document/information stewardship. Suppose you are careless with an extra set of printed loan docs. Rather than properly shredding them, you toss them in your garbage. They're stolen in the night, along with your borrower's identity. The thief is eventually caught and explains to authorities how he fished the documents out of your garbage. You are sued. Was that a notarial act? No!

On the other hand, you honestly neglect to apply your seal to a deed as part of a notarization. Through some bizarre chain of events, a person loses their property or the right to purchase property due to your omission. [Here, I don't know what California laws are, but I am speculating that a botched notarization could result in something like this under the right circumstances.] Was that done in connection with a notarial event? Yes.

A more legitimate risk... You perform a notarization for a man and his mistress, whom you have been duped into believing is his wife. Her driver license and other identity were dead-on and you had no reason to believe otherwise. Your actions help to transfer property out of his real wife's name and you are subsequently sued by her. The fact that you recorded thumbprints in your journal helps to mitigate the damages and to prove the case. The resemblance that the mistress shares with the wife speaks to your efforts and the honesty of your mistake. Still, the damage is done; the property was rapidly liquidated, the couple skipped town, and the wife is pissed. You are being sued. Was this a notarial event? Yes. It's also a very solid reason for carrying notary E&O.

Next, you perform a loan signing for a low-income couple. It has all the earmarks of predatory lending. The interest rate is through the roof and you've got a broker push-, push-, pushing to get the deal done. Later, a consumer advocate sues the lender and the broker. You are named in the suit because your name appears on hundreds of documents in connection with this particular lender and the broker, one of your high-volume clients. You have done nothing other than notarizations and each has been executed perfectly. Still, the consumer advocate is suing everyone involved. Will your Notary E&O Insurance cover your defense in this scenario? Probably.

The bottom line is that there are very real risks that warrant carrying high-limit notary E&O, especially in light of its relatively low cost. Because signing agent E&O is not practically available, common sense and knowledge are critically important to help protect yourself from non-notarial signing agent risks.

Harry

Reply by Gary_CA on 5/18/07 5:50am
Msg #190755

BURRIED TREASURE!!! POM

Great post... I hope to bring it a little attention since it's at the bottom of the thread..

Another board I frequent has a "POM" tradition.... Post Of the Month gets the writer a $100 prize...so the standard applause is to reply with a simple "POM" which constitutes a nomination.

Don't get too excited though...the board owner and his employees are disqualified.

By the way... they put those POM's in a separate archive making them easy to access forevermore...something to think about.

Thanks for all your hard work.

Reply by NCLisa on 5/18/07 7:46am
Msg #190761

"Next, you perform a loan signing for a low-income couple. It has all the earmarks of predatory lending. The interest rate is through the roof and you've got a broker push-, push-, pushing to get the deal done. Later, a consumer advocate sues the lender and the broker. You are named in the suit because your name appears on hundreds of documents in connection with this particular lender and the broker, one of your high-volume clients. You have done nothing other than notarizations and each has been executed perfectly. Still, the consumer advocate is suing everyone involved. Will your Notary E&O Insurance cover your defense in this scenario? Probably."

Your Notary E&O Insurance will not cover your defense as the suit has nothing to do with the notarization and everything to do with the loan itself. The moment you "perform a signing" you've already done far more than just a notarization and are no longer acting in the capacity of strictly a notary public. Even printing the documents and bringing them with you to a closing has one acting in a capacity other than just a notary public. The only time during a loan closing you are performing as "just a notary" is if you offer no information at all regarding the loan (not even pointing), provide no copies, and do nothing more than sit there and notarize the documents that the parties sign and ask you to notarize.

A NSA wears 2 hats, that of a notary public, and that of a signing agent and each job has its own kind of liability.

Reply by BetsyMI on 5/18/07 10:13am
Msg #190786

E&O for term of commission

Hi Harry,

Just wanted to take this opportunity to say that I wish you would offer the new E&O here for less than the term of a notary's commission. While that would be great for most that buy it here, I'm at the age where I do not intend to be doing this for another 6 years (when my commission will expire), so I'd rather buy it for the next year or two only. Any thought to possibly doing this?

Thanks

Reply by Ernest__CT on 5/18/07 10:19am
Msg #190788

Re: E&O for term of commission (for BetsyMI)

IMHO, whether you are doing loan signings or "just" plain Notary Public work, you still need E&O insurance.

Just my two pennies....

Reply by BetsyMI on 5/18/07 10:25am
Msg #190789

Re: E&O for term of commission (for Ernest_CT)

Ernest, I can see where you might have assumed that from my post since my commission would not expire for 6 years, but I wouldn't be doing any notary work at all after say two years. I would be hanging up my hat and enjoying full retirement.

I also think the cost of E&O for the entire term of my commission is a lot to pay at one time. I'd rather pay a smaller amount and have coverage only for a year or two.

Reply by Harry [NR] on 5/18/07 12:18pm
Msg #190822

Re: E&O for term of commission

We can write shorter-term policies (1, 2, 3 years, etc.). At this time, you must call to get prices and/or order them. We are looking into putting them in the store - I just don't want to complicate things too much (multiple coverage levels x multiple terms). To inquire about shorter-term coverage, click the Notary Supplies tab and call the number by the Enter Store button.

Thanks,
Harry

Reply by Joe Ewing on 5/18/07 11:13am
Msg #190803

Example...

On the other hand, you honestly neglect to apply your seal to a deed as part of a notarization. Through some bizarre chain of events, a person loses their property or the right to purchase property due to >>>>your omission. <<<<[Here, I don't know what California laws are, but I am speculating that a botched notarization could result in something like this under the right circumstances.] Was that done in connection with a notarial event? Yes.

* Forgetting to stamp the acknowledgment is an error not an omission. My opinion is this would prevent the document from being recorded. In conjunction with a Loan Signing, escrow would find the error before the document was submitted to the recorder and have you correct it. If this was a "general" Notarization the error could cause a delay in recording. This error could be subject to a civil penalty. In the "Exclusions" That fine is not covered by Notary E&O. If you are sued in civil court for damages in result of the recording delay that your error caused, your E&O would cover your legal costs and the judgment. Your Bond will only cover the judgment

Next Example...

A more legitimate risk... You perform a notarization for a man and his mistress, whom you have been duped into believing is his wife. Her driver license and other identity were dead-on and you had no reason to believe otherwise. Your actions help to transfer property out of his real wife's name and you are subsequently sued by her. The fact that you recorded thumbprints in your journal helps to mitigate the damages and to prove the case. The resemblance that the mistress shares with the wife speaks to your efforts and the honesty of your mistake. Still, the damage is done; the property was rapidly liquidated, the couple skipped town, and the wife is pissed. You are being sued. Was this a notarial event? Yes. It's also a very solid reason for carrying notary E&O.

*Another "general" notarization. My opinion is the actual wife in this example sues the notary for the Identification error. Legal fees might be incurred by the notary trying to defend himself from charges that he was somehow involved in the fraud. If he lost and was proved to be an accomplice in the crime the E&O would not cover the fines, legal fees or anything. Weather or not the notary wins or loses The Husband and the Girlfriend would be guilty of a felony and incur a $75,000 fine from the SOS.

Another Example...

Next, you perform a loan signing for a low-income couple. It has all the earmarks of predatory lending. The interest rate is through the roof and you've got a broker push-, push-, pushing to get the deal done. Later, a consumer advocate sues the lender and the broker. You are named in the suit because your name appears on hundreds of documents in connection with this particular lender and the broker, one of your high-volume clients. You have done nothing other than notarizations and each has been executed perfectly. Still, the consumer advocate is suing everyone involved. Will your Notary E&O Insurance cover your defense in this scenario? Probably.

* Probably? But the question is what are you getting sued for? The actual notarial act is covered but if there is no mistakes then no liability to the notary. But my opinion is all the actions you took from the introduction phone call to the borrowers to the final drop of the documents in the Fex Ex box is not covered. Now let's talk about OMISSIONS! A classic example of an Omission is "the loan officer didn't tell me there was a prepayment penalty"! Omission! That's why we as NAS's lead with the Settlement statement, point out the APR and the Prepayment on the TIL and touch on the particulars of the note such as the type of loan, the interest rate and the payment. So under oath you confess that in the act of the loan signing you omitted the fact that you personally felt the borrower was getting a bad loan but you kept quiet so as not to be accused of UPL. THAT is an omission. One other thing I read in the policy. In the "Exclusions" E&O does not cover prior acts. A small comfort for a veteran notary who for example is storing 20 or more completed Journals most of which were filled prior to 2004 and the popular availability of high limit E&O.

Lastly...

The bottom line is that there are very real risks that warrant carrying high-limit notary E&O, especially in light of its relatively low cost. >>>Because signing agent E&O is not practically available, common sense and knowledge are critically important to help protect yourself from non-notarial signing agent risks<<<.

Because signing agent E&O is not practically available, common sense and knowledge are critically important to help protect yourself from non-notarial signing agent risks.

* My opinion is that we are the bag men of the loan selling business. Appraisers, Title, Escrow, Loan Officers all have E&O that covers (in the absence of fraud) the entire loan selling process. We don't have it, can't get it and I wouldn't want to bet my House on the word (PROBABLY)! How many of you signing agents are INCORPORATED? Hardly any. What do you risk? Everything! The deeper the perceived pocket of the notary signing agent, the more risk of being drawn into a situation that is not covered by Notary E&O Insurance anyway.

*** These opinions are entirely my own and are not in anyway legal opinions. I am forming my own opinion (right or wrong) only from reading the coverages and exclusions of a Notary E&O Insurance Policy.***

Reply by Kevin/Ct on 5/18/07 11:17am
Msg #190804

Perhaps the answer is to carry liability insurance that covers the notaries exposure as both a notary and as a signing agent. Our law firm carries a $1,000,000.00 malpractice (professional liability) policy to cover all of these matters. Possibly a similar policy could be crafted by an insurance carrier for notary signing agents.

Reply by Joe Ewing on 5/18/07 11:33am
Msg #190810

I see you don't disagree Kevin. But if a policy was created, isn't it a little too late? Would the carrier agree to cover prior acts? Probably not!

Reply by Kevin/Ct on 5/18/07 12:47pm
Msg #190824

That is a good question. My honest answer is that I don't know. It would seem that if the policy is going to cover the same acts as those previously covered and then liability for a signing agents duties on top of it...there may be an insurance carrier out there that might cover the prior acts under the new policy. There may be many that would not. However, it would not hurt to discuss the matter with them, and explore what type of coverage is available.

Reply by Joe Ewing on 5/18/07 11:38am
Msg #190811

Kevin I forgot to add that I carry a 1,000,000 Insurance Agent E&O liability policy that is required by all of the companies I sell for. But my opinion is that the companies requiring the Notary E&O Insurance are not aware of the exclusions.

Reply by Susan Fischer on 5/19/07 12:24am
Msg #190912

Joe and Kevin: Great analysis, Joe. And Kevin, just

what risks warrant professional E & O, (for a professional price, I would assume,) do we have? Joe's takes hold pretty good water, and, wouldn't having professional coverages just create 'deep pockets' where there were none?

I believe Joe's right, that the exclusions of notary E & O aren't widely known. The responsibilities of the NSA are receiving/printing and transporting docs, traveling to a place, describing (not explaining) documents, obtaining signatures/dates/info on forms, not practicing UPL, and performing notarial acts according to State law.

What risks would a NSA Professional Liability Insurance policy cover? What about a little General Business Policy?

Reply by Kevin/Ct on 5/19/07 6:12am
Msg #190914

Re: Joe and Kevin: Great analysis, Joe. And Kevin, just

Hi Susan

All of that should be discussed with an insuance agent or insurance carrier to see what exclusions would apply.

In the case of our firm the policy covers all negligence arising from the practice of law...real estate closings...title searches...litigation. We have $1,000,000.00 of coverage which costs us an annual premium of just under $1,800.00. We have a $2,500.00 deductible for each claim made. It is my understanding that policy covers pretty much anything we run into in the course of legal practice.

We were covered by Lloyds of London for a while prior to our current insurer. At that time we were seeking coverage for title abstracting only. They were very good. They were very flexible and creative in their approach to the problem. Then again they are one of the oldest insurance carriers in the business. When we wanted to expand coverage to more general malpractice insurance I was told that our current insurer would cover the more limited abstracting activities previously covered by Lloyds...but the premium would be higher.

Insteresting story about how Lloyds got started. When the New world was discovered and trade began between England and the colonies, loss of cargoes to storms and pirates were a big problem. To get around it merchants would look for someone to guarantee delivery.
If the cargo was lost...the guarantor paid for the loss. This eventually became known as underwriting the risk. The guarantor's fee became known as the premium. Lloyds of London took their name from Lloyds Coffee House. Many of the deals were made there in the early days.

It would seem that a policy similar to an attorney's malpractice insurance policy could be crafted for the signing agents.

Reply by Kevin/Ct on 5/19/07 6:33am
Msg #190915

Re: Joe and Kevin: Great analysis, Joe. And Kevin, just

Hi Susan...

Forgot to answer one of your questions. In terms of a liability policy creating deep pockets where there previously are none...I assume you are talking about the signing agent's pockets. The truth of the matter is that a defendant's liability does not change because he/she carries insurance coverage. The difference is that if he is successfully sued without insurance coverage...his personal assets...home and bank accounts are at risk for satisfaction of the claim. If he is insured he is at risk only to the extent that the dollar amount of the policy does cover the entire amount of the judgment

Reply by BetsyMI on 5/18/07 10:27am
Msg #190790

I have only been told by one company that they would not use me unless I had $100,000 worth of E&O. I complied and never got an assignment from them anyway!

Reply by MB_AZ on 5/18/07 10:47am
Msg #190795

My 100K just expired this month. Renewed E & O for 1 yr. 100K policy for $104. I have not had anyone require this amt. but I choose it to cover myself.

Reply by cara on 5/18/07 11:17am
Msg #190805

Yes, Chicago Title in Bakersfield requires it as a prerequisite of getting on their approved notary signing agent list.

Reply by PCasey/CO on 5/18/07 1:59pm
Msg #190839

I have never had any company ask me about my E&O Insurance. A couple of the SS's I have signed up with did ask on their website and I have seen a couple of companies that their "application" states they require $100,000 minimum E&O.