The short answer to this question is, it depends. When a Statement of Claim is issued or a demand is made by a client, it may be unclear as to where liability may be attributed. As such, it is not uncommon for a claimant to name both the original selling advisor as well as the new advisor that may have purchased the book of business. There are a number of variables that may impact who is ultimately held accountable for a client loss. For example, does the claim relate to a product or service sold by the original advisor? Did the new advisor act promptly to review client files, portfolio, risk appetite, and financial goals of their new client and act on any potential issues or concerns? When an individual purchases a book of business, there is an expectation that they will take over the servicing of the accounts — which includes a thorough review of each and every client’s account and portfolio.
Financial Advisors E&O Insurance Program
The Marsh / Swiss Re Corporate Solutions America Insurance Corporation*policy provides coverage for you as an individual licensed advisor but also has an option to extend both vicarious liability coverage as well as direct liability coverage to your Corporation.
An endorsement to your policy is required which complies with Provincial regulatory requirements. The Entity Endorsement provides coverage for Life, Accident & Sickness related activities only. The endorsement does not extend to your Corporation for Mutual Fund activities.
If a corporation engages in Mutual Fund activities and requires coverage, a separate stand-alone corporate policy may be purchased through our Marsh Entity program offering.
Swiss Re Corporate Solutions America Insurance Corporation is an admitted insurance carrier authorized to transact insurance business in Canada risks in all provinces of Canada underwritten through its Swiss Re Corporate Solutions America Insurance Corporation – Canadian Branch, Toronto, Canada. more info