Errors & Omissions Liability Insurance for Financial Advisors

Transcription

1 LIBERTY INTERNATIONAL UNDERWRITERS Errors & Omissions Liability Insurance for Financial Advisors TM - Liberty Mutual Insurance Company

2 Policy Number: FITO Renewal of: FITO Errors & Omissions Liability Insurance for Financial Advisors For the purpose of the Insurance Companies Act (Canada) this document was issued in the course of the Liberty Mutual Insurance Company's insurance business in Canada. DECLARATIONS This is a claims made policy. This policy covers only Claims first made against an Insured during the Policy Period and reported to Liberty Mutual Insurance Company (hereinafter referred to as the Insurer ) during the Policy Period. Please read the attached policy terms carefully. Item 1 NAME AND ADDRESS OF POLICYHOLDER: Advocis Protective Association 390 Queens Quay West, Ste. 209 Toronto, Ontario M5V 3A2 (hereinafter referred to as APA ) Item 2 CERTIFICATE HOLDER: As further defined in the policy Item 3 FIRM OR SPONSORING ORGANIZATION: As further defined in the policy Item 4 ADDRESS: As stated on each individual Certificate of Insurance Item 5 POLICY PERIOD: For each individual Certificate of Insurance incepting between January 1, 2013 and January 1, 2014 at 12:01 a.m. local time at each Insured s mailing address. 1 3 Advocis Protective Association (01/13) Errors & Omissions Liability Insurance for Financial Advisors

3 Policy Number: FITO Renewal of: FITO Errors & Omissions Liability Insurance for Financial Advisors Item 6 INSURED DEDUCTIBLE: Coverage A exempt market product Claims $5,000 each Claim Coverage A all other Claims $0 each Claim Coverage B all Claims $5,000 each Claim Coverage C all Claims $1,000 each Claim Coverage D licensed administrative assistant claims $0 each Claim Item 7 APA DEDUCTIBLE: As determined in Section II. Item 8 LIMIT OF LIABILITY: Coverage A As shown on each individual Certificate of Insurance Coverage B As shown on each individual Certificate of Insurance Coverage C As shown on each individual Certificate of Insurance For Coverage B and C, defence expenses and supplementary payments shall be part of and not in addition to the applicable Limit of Liability shown on each individual Certificate of Insurance. Coverage B and C are subject to a shared $50,000,000 policy aggregate for all Insureds. Coverage D $1,000,000 each Claim $1,000,000 aggregate per Policy Period (higher where mandated by Provincial regulations, and as stated under individual Certificates of Insurance) Where coverage exists under another Certificate Holder's Certificate of Insurance for either Coverage A or B, as described under Section VI, C. 1. and C. 2., that Limit of Liability and Deductible shall apply. 2 3 Advocis Protective Association (01/13) Errors & Omissions Liability Insurance for Financial Advisors

4 Policy Number: FITO Renewal of: FITO Errors & Omissions Liability Insurance for Financial Advisors Item 9 PREMIUM: As stated in each individual Certificate of Insurance Item 10 RETROACTIVE DATE: As stated on each individual Certificate of Insurance Item 11 APA DEDUCTIBLE FUND CONTRIBUTIONS: As stated on each individual Certificate of Insurance Item 12 ENDORSEMENTS: 1. Quebec Regulatory Endorsement 2. Ontario Regulatory Endorsement 3. Newfoundland & Labrador Regulatory Endorsement 4. Manitoba Regulatory Endorsement 5. Nova Scotia Regulatory Endorsement 6. Saskatchewan Regulatory Endorsement 7. Prior Knowledge Exclusion Endorsement 8. Disciplinary Defence Costs Extension 9. Alberta Regulatory Endorsement This policy (consisting of the Declarations, the applicable application, the attached policy terms and the endorsement(s) referred to in Item 12) is valid only if, in addition to the facsimile signature of the President of Liberty Mutual Insurance Company, it is dated and signed below by a duly authorized representative of Liberty Mutual Insurance Company. Authorized Representative of Liberty Mutual Insurance Company October 30, 2012 Date 3 3 Advocis Protective Association (01/13) Errors & Omissions Liability Insurance for Financial Advisors

5 Errors & Omissions Liability Insurance for Financial Advisors POLICY TERMS (Words and expressions printed in Bold are defined in Section VI in this policy) The Insurer, in consideration of the payment of the premium and in reliance upon the statements and declarations made in the application and subject to all of the terms of this policy, agrees with the Policyholder and the Insured as stated in each individual Certificate of Insurance, as follows: SECTION I INSURING AGREEMENT. In consideration of the premium paid by the Insured, and provided the Insured is subscribing to this policy at the time the Claim is first made, the Insurer does hereby agree to pay on behalf of the Insured any Loss sustained by the Insured in excess of the applicable individual Insured Deductible specified in Item 6 of the Declarations and the applicable APA Deductible specified in Item 7 of the Declarations, and within the Limit of Liability specified in Item 8 of the Declarations, by reason of liability imposed by law for Damages caused by any negligent act, error, omission or breach of duty in the rendering of Professional Services by the Insured with respect to Claims first made against the Insured and reported to the Insurer during the Policy Period, and which took place on or after the Retroactive Date specified in Item 10 of the Declarations. DETERMINATION OF THE APA DEDUCTIBLE SECTION II As respects any Claim first made against the Insured and reported to the Insurer during the Policy Period, the APA Deductible in respect of that Claim shall be equal to the lesser of: (a) one hundred thousand dollars ($100,000) less the individual Insured Deductible; and (b) the Policy Year Aggregate Limit. SECTION III DEFENCE AND SETTLEMENTS. The Insurer, in the Insured's name and on his or her behalf, shall have the right and duty to investigate, defend and conduct settlement negotiations in any Claim for which coverage is provided under the terms of this policy. The Insurer or its delegate shall not settle any Claim without the consent of the Insured. Should the Insured refuse to consent to any settlement recommended by the Insurer and elect to contest the Claim, or continue any legal proceedings in connection with such Claim, the Insurer's liability for the Claim shall not exceed the amount in excess of the individual Insured Deductible and the APA Deductible for which the Claim could have been so settled, or the applicable Limit of Liability, whichever is less, plus the costs and expenses incurred with the Insurer s consent up to the date of such refusal. The Insured shall not admit liability for, or make any voluntary settlement, or incur any costs or expenses in connection with any Claim involving payment by the Insurer, except with the written consent of the Insurer Advocis Protective Association (01/13) Errors & Omissions Liability Insurance for Financial Advisors

6 Errors & Omissions Liability Insurance for Financial Advisors SECTION IV DEFENCE EXPENSES AND SUPPLEMENTARY PAYMENTS. With respect to such insurance as is afforded by this policy the Insurer shall pay in addition to the applicable Limit of Liability, except as otherwise specified in the Declarations: A. all Legal Expenses incurred in the defence of any Claim against the Insured alleging such negligent act, error or omission, and seeking Damages on account thereof, even if such Claim is groundless, false or fraudulent; B. all premiums on bonds to release attachments and appeal bonds, limited to that portion of such bond that does not exceed the Limit of Liability of this policy, but without any obligation to apply for or furnish such bonds; C. all costs taxed against the Insured in any Claim and all expenses incurred by the Insurer; D. all interest accruing after the entry of judgment, but only for that portion of the judgment which does not exceed the applicable Limit of Liability, until the Insurer has tendered or paid such part of such judgment as does not exceed the Insurer's Limit of Liability thereon; E. all reasonable Legal Expenses incurred by the Insured at the Insurer's request in assisting the Insurer in the investigation and defence of any Claim, other than loss of earnings. SECTION V LIMIT OF LIABILITY AND DEDUCTIBLE. The liability of the Insurer for the Loss on account of each Claim first made against the Insured and reported to the Insurer, (1) during a Policy Period, or (2) during that Policy Period together with the Extended Reporting Period, in either case, irrespective of the number of Insureds covered hereunder, shall be limited to the amount stated in each individual Certificate of Insurance. Multiple Insureds, Claims or claimants: The inclusion herein of more than one Insured or the making of Claims by more than one person or organization shall not operate to increase the Insurer s Limit of Liability. Two or more Claims arising out of a single act, error or omission or a series of related acts, errors or omissions shall be treated as a single Claim. All such Claims, whenever made, shall be considered first made and reported to the Insurer during the Policy Period or Extended Reporting Period in which the earliest Claim arising out of such acts, errors or omissions was first made and all such Claims shall be subject to the same Limit of Liability. The Limit of Liability, as stated in each individual Certificate of Insurance, shall apply in excess of the APA Deductible subject to the Policy Year Aggregate Limit and the individual Insured Deductible. The APA Deductible and the individual Insured Deductible, as stated in each individual Certificate of Insurance, shall apply to Loss under each Claim instituted against the Insured. Should the Insurer, for any reason, pay the entire amount of Loss (excluding the individual Insured Deductible) without regard to the APA Deductible, the Policyholder will reimburse the Insurer within 45 days of the Insurer s request for such reimbursement for that part of the APA Deductible which has been paid by the Insurer. In the event that the Policy Year Aggregate Limit has been depleted in full, the Insurer shall agree to pay the entire amount of the Loss covered hereunder subject only to the individual Insured Deductible Advocis Protective Association (01/13) Errors & Omissions Liability Insurance for Financial Advisors

7 Errors & Omissions Liability Insurance for Financial Advisors SECTION VI DEFINITIONS. As used in this policy, the following words or expressions, in the singular or plural, shall mean: A. the term Insured shall mean: 1. a Certificate Holder who is a licensed life insurance agent or licensed accident and/or sickness agent or licensed mutual fund agent registered with the Mutual Fund Dealers Association; 2. a Certificate Holder who is a securities registrant, including a representative registered with the Investment Industry Regulatory Organization of Canada to sell mutual funds; 3. a Certificate Holder who is an exempt market dealing representative registered under National Instrument and who is also a Certificate Holder under paragraphs A. 1. or A. 2. above. 4. a Certificate Holder who is an unlicensed fee-only representative who provides financial service and advice as covered elsewhere by this policy, but, does not sell any financial products or investments for which a license is required; 5. a Certificate Holder who is a licensed administrative assistant, but only with respect to administrative duties and clerical support provided to an Insured who is not a licensed administrative assistant; 6. any employee of the Certificate Holder solely while acting within the scope of their duties as such, however, such coverage shall not apply to any person employed by or associated with the Insured who is licensed by any insurance or other regulatory authority to sell life or accident & sickness insurance, investments or securities; 7. the legal heirs, executor, administrator, assignee or legal representative of an Insured in the event of the Insured s death, incapacity or bankruptcy provided the Insured is subscribed to this policy at the time of his/her death. Coverage will only be provided for acts, errors or omissions committed prior to his or her death; 8. a Firm, but only to the extent of its vicarious liability, with respect to a Certificate Holder s activities specified in Section VI, Part C. and provided such Certificate Holder continues subscribing to this policy or any subsequent renewal thereof; 9. any manager or supervisor of an Insured, but only as respects such manager s or supervisor s liability as it might arise out of the Insured s activities specified in Section VI, Part C.; or 10. a Personal Corporation owned solely by the Certificate Holder or jointly by the Certificate Holder and their spouse, but only as respects its liability as it might arise out of the Certificate Holder s activities specified in Section VI, Part C Advocis Protective Association (01/13) Errors & Omissions Liability Insurance for Financial Advisors

8 Errors & Omissions Liability Insurance for Financial Advisors B. the term Certificate Holder shall include any Insured who has paid the applicable Premium as stated in Item 9 of the Declarations. C. the term Professional Services shall mean: 1. Coverage A those activities related to the conduct of the business of a licensed life insurance agent or licensed accident and/or sickness insurance agent or a representative registered with the Mutual Fund Dealers Association of Canada to sell mutual funds, including: i. activities relating to the sale of life insurance, insurance annuities, accident and sickness insurance and hospitalization or medical insurance policies and group benefit administration service agreements; ii. activities related to the sale of variable annuities and variable life insurance contracts providing for participation in life insurance company segregated investment accounts; iii. activities relating to estate plans, personal financial plans, employee benefit plans, group plans, pension plans (including Registered Retirement Savings Plans and Registered Retirement Income Funds), profit sharing plans, retirement annuities, life health and disability plans, including guaranteed investment funds to any of the foregoing. Such guaranteed investment funds, as used herein, refer to funds consisting of property insured by the Canadian Deposit Insurance Corporation, other than insurance contracts such as investment vehicles of banks and trust companies; iv. activities relating to the sale of mutual funds and guaranteed investment contracts; v. for those Certificate Holders who have paid the applicable additional annual premium specified below, activities relating to and including the sale of Exempt Products as an exempt market dealing representative registered under National Instrument However, coverage is limited to sale of Exempt Products through exempt market dealers who are approved by the Insurer. Exempt Product Limit of Liability 1 $1,000,000 each Claim $2,000,000 per Policy Period $2,000,000 each Claim $2,000,000 per Policy Period $3,000,000 each Claim $3,000,000 per Policy Period Additional Annual Premium $400 $460 $640 1 Exempt Product Limit of Liability is part of and not in addition to the Certificate Holder s Limit of Liability for Coverage A as specified in Item 8 of the Declarations and in no event shall such Exempt Product Limit of Liability exceed the Limit of Liability for Coverage A as specified in Item 8 of the Declarations. vi. for those Certificate Holders who have paid the applicable additional annual premium specified below, activities relating to and including the sale of Exempt Products as an exempt market dealing representative registered under National Instrument Advocis Protective Association (01/13) Errors & Omissions Liability Insurance for Financial Advisors

9 Errors & Omissions Liability Insurance for Financial Advisors Exempt Product Limit of Liability 1 $250,000 each Claim $500,000 per Policy Period $500,000 each Claim $1,000,000 per Policy Period Additional Annual Premium 1 Exempt Product Limit of Liability is part of and not in addition to the Certificate Holder s Limit of Liability for Coverage A as specified in Item 8 of the Declarations vii. activities relating to and including sales management or supervisory activities by Insureds in the activities referenced in i. through iv. above; or activities relating to and including sales management or supervisory activities over individual Insured(s) in the activities referenced in v and vi. above. 2. Coverage B (A) Those activities related to a securities registrant registered with the Investment Industry Regulatory Organization of Canada, including: i. activities relating to and including the sale of mutual funds; ii. activities relating to and including the sale of securities; iii. activities relating to and including the sale of Exempt Products as an exempt market dealing representative registered under National Instrument However, coverage is limited to sale of Exempt Products through exempt market dealers who are approved by the Insurer. iv. for those Certificate Holders who have paid the applicable additional annual premium specified below, activities relating to and including the sale of Exempt Products as an exempt market dealing representative registered under National Instrument $200 $300 Exempt Product Limit of Liability 1 $250,000 each Claim $500,000 per Policy Period $500,000 each Claim $1,000,000 per Policy Period Additional Annual Premium $200 $300 1 Exempt Product Limit of Liability is part of and not in addition to the Certificate Holder s Limit of Liability for Coverage B as specified in Item 8 of the Declarations v. activities relating to and including sales management or supervisory activities by Insureds in the activities referenced in i. through iii. above; or activities relating to and including sales management or supervisory activities over individual Insured(s) in the activities referenced in iv. above Advocis Protective Association (01/13) Errors & Omissions Liability Insurance for Financial Advisors

10 Errors & Omissions Liability Insurance for Financial Advisors (B) Those activities of a Certificate Holder relating to: i. preparation of income tax returns; ii. preparation of review engagements or notice to readers for financial statements which are incidental to the completion of income tax returns on behalf of sole proprietors and single shareholder corporations only; iii. services and advice in his/her capacity as an Executor of estates; iv. services and advice in his/her capacity as a Notary Public or equivalent as defined by Provincial Statute; v. services and advice in his/her capacity as a Commissioner of Oaths as defined by Provincial Statute; vi. services and advice in his/her capacity as a Certified Divorce Financial Analyst (CFDA) or Financial Divorce Specialist (FDS); however, coverage will not apply to the rendering of any services or advice relating to the valuation of real or personal property other than service or advice on such matters as are specifically afforded coverage under this policy; vii. activities relating to and including sales management or supervisory activities over individual Insured(s) in the activities referenced in i through vi. above. 3. Coverage C those activities outlined below, relating to an unlicensed fee-only representative: i. activities relating to services provided by an unlicensed Insured in the providing of financial advice for a fee and for which a license is not required. ii. activities relating to and including sales management and supervisory activities over individual Insured(s) in the activities referenced in i. above. 4. Coverage D those activities outlined below, relating to a licensed administrative assistant: i. activities relating to the sale of life insurance, annuities, accident and sickness insurance and hospitalization or medical insurance policies. D. the term Loss shall include such amounts payable by the Insured in settlement of Claims or in satisfaction of judgments including Legal Expenses. Loss shall not include fines, penalties, punitive or exemplary damages; E. The term Claim shall mean: 1. the earliest notice of legal process received by the Insured, the earliest demand for money or services made against the Insured in respect of Professional Services; 2. a proceeding, event or development which could in the future reasonably result in the institution of a Claim against the Insured in respect of Professional Services of which the Insured has first become aware during the Policy Period. F. the term Firm shall mean any agency, corporation, partnership or other organization through which one or more Insured(s) is or was doing business or is or was employed Advocis Protective Association (01/13) Errors & Omissions Liability Insurance for Financial Advisors

11 Errors & Omissions Liability Insurance for Financial Advisors G. the term Policyholder shall mean the Advocis Protective Association, a wholly-owned subsidiary of The Financial Advisors Association of Canada, named under Item 1 of the Declarations. H. the term Sponsoring Organization shall mean the corporate group responsible for the management of its agents' plan and named under Item 3 of the Declarations. I. the term Relative shall mean any persons related to an Insured by marriage or adoption, including spouses, parents, children, stepparents, stepchildren, grandparents, grandchildren, siblings and stepsiblings. J. the term Legal Expenses shall mean fee(s) charged by a lawyer(s) designated by the Insurer, and all other fees, costs and expenses resulting from the investigation, adjustment, defence, and appeal of a Claim incurred by the Insurer. Legal Expenses does not include salary charges of an Insured. K. the term Exempt Products shall mean Guaranteed Investment Certificates that are not insured by the Canada Deposit Insurance Corporation and Exempt Securities. L. the term Exempt Securities shall mean Linked Notes, Principal Protected Notes, Structured Notes, Labour Sponsored Investment Funds, Flow Through Shares, Hedge Funds and any products exempt from the prospectus requirement as determined in the Securities Act in each applicable province. M. the term Damages shall mean compensatory damages, including applicable pre-judgment and postjudgment interest. Damages does not include fines, penalties, punitive or exemplary damages. N. the term Policy Period shall mean the policy term as stated in Item 5 of the Declarations. O. the term Personal Corporation shall mean a corporation owned by an Insured solely or jointly with his or her spouse, which has no licensed agents or unlicensed agents and such corporation does not conduct any business independent of the Insured. P. the term Policy Year Aggregate Limit shall mean: 1. the sum of all APA Deductible Fund Contributions which are or will be deposited in the APA deductible fund trust for the applicable Policy Period; less 2. the sum of all APA Deductible amounts paid for Claims made during the applicable Policy Period, but in no event shall the amount calculated above be less than zero. SECTION VII EXCLUSIONS. This policy does not apply to any Claim: A. arising out of act, error, omission, or breach of duty which are fraudulent, dishonest, criminal or malicious. However, the Insured shall be reimbursed for reasonable Legal Expenses incurred by the Insured in the defence of such Claim if such allegations are not subsequently proven through final non-appealable judgment or adjudication. This exclusion does not apply to any Insured who is neither the author, nor an accomplice of, the said act, error, omission or breach of duty; 7 13 Advocis Protective Association (01/13) Errors & Omissions Liability Insurance for Financial Advisors

12 Errors & Omissions Liability Insurance for Financial Advisors B. arising out of bodily injury (including libel, slander and violation of a persons right of privacy) to, or sickness, disease or death of any person arising out of the acts of the Insured; C. arising out of injury to or destruction of any property, including the loss of use thereof; D. arising out of any liability assumed by the Insured under contract, unless the Insured would have been legally liable in the absence of such contract; E. arising out of the financial inability to pay, insolvency, receivership, bankruptcy or liquidation of any insurance company, any reinsurer, any pool, syndicate, association or other combination formed for the purpose of providing insurance or reinsurance or of any firm or organization in which any person has invested as a result of consultation with the Insured; F. arising out of professional services performed by the Insured as an actuary, accountant, lawyer, property and casualty insurance agent, property and casualty insurance broker, real estate agent or real estate broker; G. arising out of commissions, taxes, fees, or the failure to collect, pay or return premium or the comingling or use of client's funds; H. arising out of the Insured's promises or guarantees as to: 1. interest rates; 2. fluctuations in interest rates; 3. future premium payments; 4. market value(s) of the insurance or investment products; or 5. currency or commodity values; I. arising out of the termination or discipline of any employee or agent of the Insured, including, but not limited to, wrongful termination or breach of an employment or agency contract; J. arising out of any pension, profit sharing, health or welfare or other employee benefit plan or trust sponsored by the Insured as an employer; K. based solely on the Insured's status as a named fiduciary or under power of attorney; except as provided for elsewhere under this policy; L. arising out of the unauthorized use of trade secrets or confidential or proprietary information or insider trading; M. brought against the Insured by any securities broker/dealer, investment company, bank, life insurance company or any financial institution, except in the capacity as a customer or client; N. arising out of the provisions of or any duties imposed upon any person by any federal, provincial or state statute or regulation of Canada or the United States which governs or regulates pension or retirement plans; O. arising out of the activities of the Insured in the hiring, supervision, training or control of employees, except as covered elsewhere under this policy; 8 13 Advocis Protective Association (01/13) Errors & Omissions Liability Insurance for Financial Advisors

13 Errors & Omissions Liability Insurance for Financial Advisors P. arising out of a willful violation of any statute; Q. arising out of a willful violation of any rule or regulation of any securities regulatory agency; R. arising out of express warranties, guarantees or estimates of profit, return on capital, economic return, or other estimates giving rise to forecasts of economic return; S. wherein the Insured markets any products managed totally or partially by the Insured; T. arising from a Claim against an Insured, when such Claims are brought by a business: 1. owned totally or partially by an Insured, including any firm, enterprise or joint venture which are controlled by, affiliated with, or a subsidiary of the Insured; or 3. controlled or managed totally or partially by an Insured; or 4. which is directly or indirectly involved in any way in the ownership or management of on Insured s business; or 5. of which an Insured is a partner or employee; U. arising out of the Insured's activities or its delegate as the third party administrator of any plan, whether insured or self insured and whether the Insured performs such activities for a fee or for no fee; V. arising out of referral fees, except with respect to insurance products and investments for which coverage is otherwise provided under this policy. This exclusion shall not apply in respect of any referral fee for which the client has acknowledged in writing that he/she is aware the Insured will receive a fee for that referral and has agreed to release the Insured(s) from any liability in respect of the referral; W. brought by an: 1. Insured; 2. a Relative of an Insured and/or any Estate of the Insured and/or any legal representative of the Estate of the Insured and/or any person making a Claim by reason of an assignment or distribution from an Insured and/or Estate of an Insured and/or trustee or beneficiary of any trust created or maintained for the benefit of any Insured; 3. any organization, corporation, company, partnership or operation while an Insured or Relative of an Insured is an officer, trustee, director, partners, manager, employee or who owns or controls more than 10% equity interest at the time the negligent act, error or omission giving rise to such Claim took place; Y. arising from Professional Services for which the Insured was unlicensed and for which they are required to be licensed. SECTION VIII PREMIUM. The Insured shall pay the Insurer in advance the Premium due to the Insurer, in the amount stated in each individual Certificate of Insurance issued under this policy, and the payment of such Premium shall be a condition precedent to any coverage under this policy Advocis Protective Association (01/13) Errors & Omissions Liability Insurance for Financial Advisors

14 Errors & Omissions Liability Insurance for Financial Advisors SECTION IX PAYMENT OF THE APA DEDUCTIBLE. At the written request of the Insurer, the Policyholder shall pay to the Insurer the amount of the APA Deductible as determined in accordance with Section II. SECTION X POLICY PERIOD. This policy applies only to Claims first made against the Insured and reported to the Insurer during the Policy Period as noted on each Individual Certificate of Insurance. This policy may be continued in force for successive policy periods of twelve months subject to both the Insurer offering to renew by issuing a renewal policy or endorsement and the Policyholder accepting such coverage. SECTION XI EXTENDED REPORTING PERIOD. A. If the Insurer elects not to renew this policy or if the Insurer cancels this policy for any reason other than failure to pay premium when due, and if the Insured has not obtained a replacement policy, this policy shall apply to Claims first made against the Insured and reported to the Insurer during the 60 day period following the date of such non-renewal or cancellation of the policy (called the Extended Reporting Period) and caused by such negligent acts, errors or omissions occurring during any prior consecutive policy periods covered by this policy, renewal thereof, or any policy issued by the Insurer which this policy replaced. If the Insurer elects not to renew this policy or the Insurer or Policyholder elects not to renew an individual Certificate of Insurance issued to an Insured, or the Insurer, the Policyholder, or Insured cancels an individual Certificate of Insurance, the Insured shall have the right to purchase a one-year Extended Reporting Period by paying, within 60 days after such non-renewal or cancellation, seventyfive percent (75%) of the annual Premium as stated in the applicable individual Certificate of Insurance. Such Extended Reporting Period will begin immediately following the date of non-renewal or cancellation and will run for one year, covering Claims first made against the Insured and reported to the Insurer during the Extended Reporting Period and caused by such negligent acts, errors or omissions occurring during any prior consecutive policy periods covered by this policy or any individual Certificate of Insurance, renewal thereof, or any policy or any individual Certificate of Insurance issued by the Insurer which this policy or individual Certificate of Insurance replaced. For the purpose of the Insurer's Limit of Liability, any Extended Reporting Period will be combined with, and be a continuation of, the last Policy Period. The Insured shall only have the right to such Extended Reporting Period coverage, if: 1. The non-renewal or cancellation of the policy is not based on the Insured's failure to pay premium or deductible when due; or 2. The Insured has not failed, after demand, to reimburse the Insurer the amount of the applicable deductible. B. In the event the Insured ceases to permanently engage in the activities for which coverage is provided, or becomes disabled or dies, at the next renewal date or upon request of termination of the Insured s Certificate of Insurance, the Insured or any heir, executor, administrator, assignee, or legal representative, shall have the right to purchase an Extended Reporting Period, by paying within 60 days after the termination or renewal date of the Insured s Certificate of Insurance, the flat premium shown in the following schedule. Such Extended Reporting Period will begin immediately following the date of such permanent cessation of activities for which coverage is provided, disability or death, Advocis Protective Association (01/13) Errors & Omissions Liability Insurance for Financial Advisors

15 Errors & Omissions Liability Insurance for Financial Advisors and will run for not less than 2 years, covering Claims first made against the Insured and reported to the Insurer during the Extended Reporting Period and caused by such negligent acts, errors and omissions occurring during any prior consecutive policy periods covered by this policy, renewal thereof, or any policy issued by the Insurer which this policy replaced. The Insurer's Limit of Liability for such Extended Reporting Period shall be the Limit of Liability set out in the applicable individual Certificate of Insurance. SCHEDULE: Flat Premium Extended Reporting Period (the percentage of the annual premium shown on the applicable individual Certificate of Insurance) 2 Years 100% 3 Years 125% 4 Years 150% 5 Years 175% 6 Years 200% SECTION XII NOTICE. The Insured shall give prompt written notice as directed by the Insurer of: A. any Claim made against the Insured, and B. any proceeding, event, or development which in the judgment of the Insured might reasonably result in a Claim against the Insured; and shall forward promptly copies of such pleadings and reports as may be requested. Notwithstanding the aforementioned, any late notice or absence of notice is cause of forfeiture of the rights of the Insured, if the Insurer sustains injury therefrom. SECTION XIII COOPERATION. The Insured shall cooperate with the Insurer, and, upon the Insurer's request, shall attend hearings and trials and shall assist in effecting settlements, securing and giving evidence, obtaining the attendance of witnesses and in the conduct of Claims. SECTION XIV CONDITIONS ACQUISITIONS AND MERGERS. In the event of any merger, consolidation, amalgamation or acquisition involving an Insured and any other insurance agent or insurance agency or any material change in the Insured s operations, the Insured shall notify the Insurer of such change within 90 days of the date of such change. OTHER INSURANCE. If, but for the insurance afforded by this policy, the Insured would have other insurance against a Loss otherwise covered hereby, the insurance afforded by this policy shall be excess over such other insurance Advocis Protective Association (01/13) Errors & Omissions Liability Insurance for Financial Advisors

16 Errors & Omissions Liability Insurance for Financial Advisors SUBROGATION. In case of payment of Loss by the Insurer hereunder, the Insurer shall be subrogated to the amount of such payment to the Insured's right of recovery against any other person or organization for such Loss, and the Insured shall execute all papers required, and shall cooperate with the Insurer to secure such rights. However, in no event shall the Insurer be subrogated in a right of action against another Insured. Any recovery (after expenses) shall be used to reduce the Loss, and so much of such recovery shall be paid to the Insurer as will reduce the Loss ultimately borne by the Insurer to what it would have been had the recovery preceded any payment of such Loss by the Insurer. CHANGES. Notice to any Insured or knowledge possessed by any Insured or by any other person shall not effect a waiver or a change in any part of this policy or keep the Insurer from asserting any right under the terms of this policy, nor shall the terms of this policy be waived or changed, except by endorsement issued to form a part of this policy, or any individual Certificate of Insurance. ASSIGNMENT. No assignment of interest under this policy or any individual Certificate of Insurance shall be valid, unless the written consent of the Insurer is endorsed hereon; however, this shall not apply to rights provided under a premium finance contract. ACTION AGAINST INSURER. No action shall lie against the Insurer unless, as a condition precedent thereto, there shall have been full compliance with all of the terms of this policy, nor until the amount of the Insured's obligation to pay shall have been finally determined either by judgment against the Insured after actual trial or by written agreement of the Insured, the claimant and the Insurer. Any person or organization or the legal representative thereof who has secured such judgment or written agreement shall thereafter be entitled to recover under this policy to the extent of the insurance afforded by this policy. No person or organization shall have any right under this policy to join the Insurer as a party to any action against the Insured to determine the Insured's liability, nor shall the Insurer be impleaded by the Insured or his legal representative. Bankruptcy or insolvency of the Insured or of the Insured's estate shall not relieve the Insurer of any of its obligations hereunder. CLAIMS REPORTING. All Claims are to be reported to the Insurer for processing. SECTION XV TERRITORY. This policy applies to any negligent act, error or omission which takes place anywhere in the world, provided that the Claim is made and brought against the Insured in Canada, the United States of America, its territories or possessions or the District of Columbia. SECTION XVI CANCELLATION. The Insured or Policyholder may cancel an Insured s coverage under this policy by surrender of their individual Certificate of Insurance to the Insurer or by mailing to the Insurer written notice stating when thereafter the cancellation shall be effective. Any individual Certificate of Insurance may be cancelled by the Insurer by mailing to the Insured at the address shown in the individual Certificate of Insurance written notice stating when not less than 60 (sixty) days thereafter such cancellation shall be effective. The mailing of notice as aforesaid shall be sufficient proof of notice. The time of the surrender or the effective date and hour of cancellation stated in the notice shall become the end of the Policy Period. Delivery of such written notice either by the Sponsoring Organization, Insured, Policyholder or by the Insurer shall be equivalent to such mailing Advocis Protective Association (01/13) Errors & Omissions Liability Insurance for Financial Advisors

17 Errors & Omissions Liability Insurance for Financial Advisors If the Sponsoring Organization, Insured or Policyholder cancels, earned premium shall be the customary short rate amount of the annual premium. If the Insurer cancels, earned premium shall be the pro rata amount of the annual premium. Premium adjustment may be made at the time cancellation is effected and, if not then made, shall be made as soon as practicable after cancellation becomes effective. The Insurer's cheque or the cheque of its representative mailed as aforesaid shall be sufficient tender of any refund of premium due to the Insured, provided that if at the time of cancellation the policy limit for the indemnity period involved has been exhausted, the entire premium shall be considered earned. However, any individual Certificate of Insurance may be cancelled by the Insurer as aforesaid by giving not less that fifteen (15) days notice in the event of nonpayment of premium by any individual Insured. SECTION XVII INSPECTION OF RECORDS. The Insurer has the right to inspect the books and records of the Sponsoring Organization, Insured or Policyholder at any time during the Sponsoring Organization's, Insured's or Policyholder's regular business hours. SECTION XVIII CURRENCY. Whenever used in this contract the words "dollars" and the sign "$" shall mean Canadian dollars. SECTION XIX CONFORMITY TO STATUTE. Terms of this policy which are in conflict with the statutes of the Province wherein the individual Certificates of Insurance are issued are hereby amended to conform to such statutes. SECTION XX CROSS LIABILITY and SEVERABILITY OF INTEREST. The policy shall insure each Insured in the same manner and to the same extent as if a separate policy were issued to each. The term "the Insured" is used severally and not collectively, but the inclusion herein of more than one Insured shall not operate to increase the limits of the Insurer's liability or the deductible amount. Any act, error or omission, or breach of policy condition, on the part of one lnsured shall not affect the protection given by this policy to any other Insured. Nothing within this condition shall be construed to over-ride any provision of Section V LIMIT OF LIABILITY AND DEDUCTIBLE of the policy. In witness whereof, Liberty Mutual Insurance Company has caused this policy to be signed by its president and secretary and counter-signed on the Declarations page by a duly authorized representative of the Insurer. President Secretary Advocis Protective Association (01/13) Errors & Omissions Liability Insurance for Financial Advisors

18 Endorsement No. 1 QUEBEC REGULATORY ENDORSEMENT Effective Date: January 1, 2013 Policy Number: FITO Issued To: Advocis Protective Association By: Liberty Mutual Insurance Company IT IS HEREBY UNDERSTOOD AND AGREED THAT: Notwithstanding anything to the contrary, for Insureds licensed in accordance with the Autorité des Marchés Financiers: 1. The expression negligent act, error, omission or breach of duty wherever written in this policy is replaced with the expression fault, errors, negligence or omissions. 2. The Limit of Liability shall be no less than $1,000,000 each Claim and $2,000,000 in the aggregate per Policy Period. 3. Legal Expenses shall be in addition to and shall not reduce the applicable Limit of Liability. 4. Section VI, DEFINITIONS, Paragraph A.5. is amended to include mandatories, representatives, employees, past or present trainees of an independent representative, firm or partnership, as the case may be, in the performance of their duties whether or not such persons are still so engaged on the date of the Claim; 5. The Limits of Liability provided in this Endorsement are a part of and erode the Limits of Liability indicated on the Insured s individual Certificate of Insurance. 6. Subject to all of the other terms and conditions of this policy, if an Insured ceases to pursue activities, irrespective of whether he or she is still alive, the Insured shall receive an automatic extended reporting period of five years from the date the Insured ceases to pursue activities. The extended reporting period applies only to fault, errors, negligence or omissions which occurred prior to the discontinuance of practice. Such extended reporting period shall be a part of and not in addition to the immediately preceding Policy Period and shall not in any way increase the applicable Limit of Liability. 1 2 (01/13)

19 7. In the event the Insurer cancels or does not renew this policy, the Insurer undertakes to give sixty (60) days advance notice by registered mail to the Autorité Des Marchés Financiers at the address indicated below: Autorité Des Marchés Financiers Place de la Cité, tour Cominar 2640 Boulevard Laurier, bureau 400 G1V 5C1 ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED. Authorized Representative of Liberty Mutual Insurance Company October 30, 2012 Date 2 2 (01/13)

20 Endorsement No. 2 ONTARIO REGULATORY ENDORSEMENT Effective Date: January 1, 2013 Policy Number: FITO Issued To: Advocis Protective Association By: Liberty Mutual Insurance Company IT IS HEREBY UNDERSTOOD AND AGREED THAT: Notwithstanding anything to the contrary, for Insureds licensed to sell life insurance and / or accident and sickness insurance in the Province of Ontario the following shall apply but solely with respect to the sale of life insurance and /or accident and sickness insurance. 1. The Limit of Liability shall be no less than $1,000,000 each Claim and $2,000,000 aggregate per Policy Period, with an Insured Deductible of no more than $1,000 each Claim. 2. Notwithstanding anything to the contrary, and with respect to the coverage afforded under this paragraph only, for those Insureds licensed in the Province of Ontario coverage shall also apply to a Claim, in excess of the Insured Deductible and APA Deductible subject to the minimum Limit of Liability indicated in paragraph 1 of this Endorsement, for which the Insured is legally liable to any third party (other than an insurance company which may have or assert a right of action for breach of contract or for indemnity of contribution), as a result of any dishonest or fraudulent act by one or more Insured acting directly or in collusion with others in the conduct of the business of a licensed life insurance agent and / or licensed accident and sickness insurance agent in the Province of Ontario, as defined in the Insurance Act of Ontario, while this coverage is in force and for which a Claim is made against the Insured during the Policy Period, subject to the following provisions: (a) (b) In the event of the failure of the Insured to pay a Loss to which this policy may apply by virtue of this paragraph upon demand of any third party then the Insurer shall make payment, after investigating coverage, directly to such third party and shall be entitled to reimbursement from the Insured for the amount of the Deductible as outlined in paragraph 1 of this Endorsement and any other amount expended by the Insurer. The coverage afforded under this Policy by virtue of this paragraph shall not: i. benefit any person or entity committing, making or condoning any such dishonest or fraudulent act; ii. benefit any creditor of any Insured hereunder for non-payment of accounts, or refunds of premiums or premium taxes; or 1 2 (01/13)