HI Notary Errors and Omissions and Notary Liability 1 — Questions and Answers
Question 1: What type of insurance protects a Hawaii notary from financial liability for honest mistakes made during notarizations?
- Surety bond
- Errors and Omissions (E&O) insurance (Correct answer)
- General liability insurance
- Professional malpractice insurance for attorneys
Correct answer: Errors and Omissions (E&O) insurance
Errors and Omissions (E&O) insurance is designed specifically to protect notaries from claims arising from unintentional mistakes made in good faith.
Errors and Omissions (E&O) insurance is a type of professional liability insurance that covers a notary against claims arising from mistakes (errors) or things left undone (omissions) in the performance of notarial acts — as long as these were unintentional and made in good faith. E&O insurance does not cover intentional misconduct, fraud, or criminal acts. Hawaii does not require E&O insurance as a condition of the notary commission, but it is strongly recommended as financial protection against civil lawsuits.
Question 2: Under what legal theory could a Hawaii notary be held liable for a signer who suffered financial loss due to the notary's failure to properly verify identity?
- Strict liability — the notary is always liable if any harm occurs
- Negligence — failing to exercise the standard of care required of a notary (Correct answer)
- Intentional tort — because all failures are assumed intentional
- Notaries cannot be held liable for identity verification failures
Correct answer: Negligence — failing to exercise the standard of care required of a notary
A notary can be held civilly liable under negligence theory for failing to exercise the reasonable care required in verifying a signer's identity.
A Hawaii notary owes a duty of care to both the parties to a transaction and the public when performing notarial acts. Negligence — the failure to exercise the standard of care that a reasonably competent notary would exercise — is the primary legal theory for civil liability. If a notary fails to properly verify a signer's identity (e.g., accepts an obviously fraudulent ID, notarizes without any ID), and a third party suffers financial harm as a result of the fraudulent notarization, the notary may be held civilly liable in negligence. Strict liability does not apply — the notary's conduct must fall below the reasonable standard of care.
Question 3: Does Hawaii law require notaries to carry Errors and Omissions insurance?
- Yes — E&O insurance is mandatory for all Hawaii notaries
- No — E&O insurance is optional and not required by Hawaii law (Correct answer)
- Only for notaries who charge a fee
- Only for notaries who perform RON
Correct answer: No — E&O insurance is optional and not required by Hawaii law
Hawaii does not require E&O insurance as a condition of a notary commission — it is optional but strongly recommended.
Under HRS Chapter 456, Hawaii does not require notaries to carry Errors and Omissions insurance or any other form of professional liability insurance as a condition of their commission. Hawaii also does not require a surety bond (unlike many other states). However, despite not being legally required, E&O insurance is strongly recommended by notary associations because it provides financial protection against civil liability claims. Without insurance, a notary found liable for damages may have to pay out of pocket.
Question 4: A Hawaii notary notarizes a power of attorney without properly verifying the signer's identity. The signer was actually an impostor. What is the notary's exposure?
- None — the notary is not responsible for fraud committed by others
- Civil liability for damages caused by the failure to properly identify the signer (Correct answer)
- Only criminal liability if the fraud was intentional
- No liability since the principal's bank should have caught the fraud
Correct answer: Civil liability for damages caused by the failure to properly identify the signer
Failing to properly verify identity is negligence, and if that failure facilitates fraud that causes harm, the notary can be civilly liable for the resulting damages.
One of the notary's primary duties is to verify the identity of the person appearing before them. If the notary fails to exercise reasonable care in identity verification (e.g., does not look carefully at the ID, accepts an obviously questionable ID, or performs the notarization without any ID), and an impostor uses the fraudulently obtained notarized document to cause financial harm to the true principal, the notary may be held civilly liable for the damages. The negligent failure to fulfill the core notarial duty creates the legal exposure.
Question 5: What is the difference between E&O insurance and a surety bond for Hawaii notaries?
- They are identical products with different names
- E&O insurance protects the notary; a surety bond primarily protects harmed third parties and the state (Correct answer)
- A surety bond is required; E&O insurance is not
- A surety bond protects the notary from their own mistakes
Correct answer: E&O insurance protects the notary; a surety bond primarily protects harmed third parties and the state
E&O insurance is primarily for the notary's benefit (pays the notary's legal defense and damages). A surety bond primarily ensures compensation for people harmed by the notary's misconduct.
E&O insurance and surety bonds serve different purposes: E&O insurance protects the notary themselves by paying for legal defense costs and any damages they are ordered to pay to a plaintiff who was harmed by the notary's error or omission. A surety bond is a guarantee to the public and the state that if the notary causes harm, a bonding company will pay damages up to the bond amount — after which the bonding company may seek reimbursement from the notary. Hawaii does not require either for general notaries (RON notaries may have different requirements), but the distinctions are important for notaries who voluntarily obtain coverage.
Question 6: A Hawaii notary signs a notarial certificate for a document after being told it is needed quickly and without following standard procedures. The document is later used in fraud. Which best describes the notary's liability?
- None — good intentions protect the notary from liability
- Significant — cutting corners on required procedures is negligence at minimum and may be willful misconduct (Correct answer)
- Limited — only the person who committed the fraud is liable
- None — the DCCA indemnifies notaries for procedural errors
Correct answer: Significant — cutting corners on required procedures is negligence at minimum and may be willful misconduct
Failing to follow required procedures, even under time pressure, is at minimum negligence and can expose the notary to significant civil and potentially criminal liability.
A notary's duty to follow proper notarial procedures is not contingent on how much time is available or how urgent the request seems. Cutting corners — such as skipping identity verification, notarizing without the signer present, or pre-signing certificates — violates the notary's duty of care and constitutes at least negligence. If the improper notarization then enables fraud, the notary faces significant civil liability. If the notary knew the document was problematic and proceeded anyway, the misconduct rises toward willful misconduct or complicity in fraud, with potential criminal consequences.
HI Notary Errors and Omissions and Notary Liability 1
What type of insurance protects a Hawaii notary from financial liability for honest mistakes made during notarizations?