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Bonds are often spoken of as if they were insurance policies. They are not.
Insurance involves risk, but a surety bond does not.
A bond is monetary guarantee by the Surety (Bonding Company) to a third party, the Obligee that the Principal (or Obligor), will act according to certain requirements by, or obligations to, the Obligee. Thus, the Surety would only pay the Obligee on behalf of the Principal failing to fulfill those obligations. No one else other than the Obligee would ever have a claim against the Surety Bond.
What a Notary Public Bond Does
The Notary Public is an appointed officer of the State of Arkansas. In the case of the Notary Bond, the State is the Obligee. The Notary Bond is an obligation to the State, no one else, on behalf of the Principal, the Notary Public, and only if the Principal fails to act according to the requirements of the State. Thus, the only amount that can be recovered from the Surety is a reimbursement to the State for an amount, up to the bond obligation amount, having been paid by the State to satisfy an allowed claim, such as through the State Claims Commission.
Definition of "Obligee"
The individual, business or organization named in a surety bond
in whose favor the obligor promises performance.
The person, firm or corporation protected by the bond.
Definition of "Surety"
A surety is a person (or company) obligated by a contract
under which one agrees to pay a debt or perform a duty if the other
who is bound to pay the debt or perform the duty fails to do so.
Usually, the party receiving the surety's performance will first
try to collect or obtain performance from the debtor before
trying to collect from the surety.
a guarantor of payment or performance if another fails
to pay or perform, such as a bonding company which posts a bond
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