Frequently Asked Questions

Why is the new policy period 12/31/24-12/31/25?

The policy period is an annual policy period that runs 12/31/24-12/31/25. Avantax is now included on the same policy as the other Cetera company broker/dealers.

Why should you enroll in the Avantax sponsored Errors & Omissions (E&O) Insurance Program?

An important part of running a successful business is ensuring that you are protected from the unexpected. The Avantax sponsored E&O Insurance Program (the “E&O Program”) is underwritten by National Fire & Marine Insurance Company (a Berkshire Hathaway company) which is a premier insurance carrier for Financial Professional E&O programs. The Avantax’s sponsored E&O program available to you offers some of the most comprehensive and cutting-edge coverage available in the E&O marketplace at a very competitive cost.

Who is required to enroll in the Avantax Professional Liability Errors & Omissions Program?

All Financial Professionals who are affiliated with Avantax Investment Services, Inc. and/or Avantax Advisory Services, Inc., Avantax Insurance Company, LLC or Avantax Insurance Services, Inc. (hereinafter, “Avantax”) and all Financial Professionals who are participants of an Avantax referral program (unless a Financial Professional obtains an alternative E&O policy that satisfies Avantax’s Opt-Out Criteria, as outlined in FAQ Nos.13-14).

The enrollment kit will be emailed for your required enrollment in the Avantax Sponsored E&O Program on December 16, 2024.

Who is covered under the Avantax Professional Liability Program?

Financial Professionals and Referral Representatives who are affiliated with Avantax and who have enrolled in the E&O Program (electing, at a minimum, the Basic Coverage level, which includes Securities, Insurance and Cyber) and paid the participation fee are covered under the policy. Your corporation, partnership or other business entity which is owned or controlled by you would also be covered, but only for the professional services rendered by you.

Are my secretarial or administrative employees also covered under the Program?

Yes, they are covered under the Program for administrative and secretarial professional services they render on your behalf, as long as they are not receiving commission income. If you elect the Basic Plus coverage level, which includes Accounting coverage, your secretarial or administrative employees are also covered for accounting services done on your behalf and pursuant to your direction and supervision.

The following activities performed by an administrative or secretarial employee on behalf of an Insured Financial Professional are contemplated for coverage if the Basic Plus coverage level has been elected by the Insured Financial Professional:

Preparing, but not signing, tax returns
Performing bookkeeping or payroll services
Performing other ministerial services in support of the Insured Financial Professional’s

business

Activities rendered by employees working on the Insured Financial Professional’s behalf that are not contemplated for coverage, regardless of whether the Insured Financial Professional has elected Basic Plus coverage are:

Providing investment or tax advice
Signing tax returns
Going before the IRS as an Enrolled Agent on behalf of a client.

NOTE: this coverage does NOT extend to your tax practice partners or other tax professionals in your office, or any secretarial or administrative employees working on their behalf, unless they are also affiliated with Avantax and enrolled in the Avantax sponsored E&O program under the Basic Plus coverage level.

What Professional Services are covered under the Program?

Full-time Financial Professionals are covered for the sale, attempted sale, or servicing of securities products and services approved by and provided through Avantax Investment Services, Inc., investment advisory products and services approved by and provided through Avantax Advisory Services, Inc., and insurance products and services approved by and provided through Avantax Insurance Services Inc. and Avantax Insurance Company, LLC, or any other company, i.e. the sale of life, accident & health insurance and fixed annuities. (You must list your insurance products on your Outside Business Activity disclosure reporting form.)

Referral Representatives are covered for the referral of securities products to a full-time Avantax Financial Professional, and if properly licensed and approved, may also sell/service securities approved by and provided through Avantax Investment Services, Inc., investment advisory products and services approved by and provided through Avantax Advisory Services, Inc., and insurance products and services approved by and provided through Avantax Insurance Services, Inc. and Avantax Insurance Company, LLC, or any other company. [You must list your insurance products on your Outside Business Activity disclosure reporting form.]

Are Accounting and Tax Services covered?

Yes, provided the full-time Financial Professional elects the optional Accounting Coverage extension by purchasing the Basic Plus coverage level during annual enrollment. If elected, Professional Services shall also include: bookkeeping; issuance of compilation reports; reviews of unaudited financial statements; management, advisory or consulting services with respect to improving business efficiency; providing tax advice; preparing tax returns and acting as an enrolled agent or CPA representing clients before the IRS and preparing the beneficial ownership report pursuant to the Corporate Transparency Act. Limited coverage for Audit Services rendered to individual customers is included under the Accounting Coverage extension (audit services for firms/entities remains excluded, refer to the Highlights Guide for details).

NOTE: (1) Coverage for accounting and tax services is limited to you, your business entity, and your administrative, secretarial, bookkeeping and tax preparation employees strictly for the accounting and tax services done by you or on your behalf, as described in FAQs 3 and 4, above. Tax work done by or on the behalf of any other tax professionals in your office is outside the scope of this coverage and should be separately insured. (2) Referral Representatives who require the Accounting Coverage extension must enroll at the full-time, non-discounted E&O participation cost, for such coverage.

Does the E&O Program provide Cyber Liability coverage?

No, the Cyber Liability Insurance is no longer combined along with the E&O Insurance. The Cyber Liability insurance coverage is now being provided under a separate policy that covers the Financial Professionals of Avantax. Please note, there will be an additional participation fee for this coverage. The new cyber program will increase the per claim limit from $150k to $250k and increase the limits for critical coverages like Ransomware from $75k to $250k. Please see the Cyber liability insurance highlights on the Avantax enrollment website.

What are my limits of liability?

There are three limits available to Financial Professionals, $1,000,000 per Claim/$1,000,000Aggregate, $2,000,000 per Claim/$2,000,000 Aggregate and $5,000,000 per Claim/$5,000,000 Aggregate. Please note, certain coverage extensions include sub limits of liability that are included within and not in addition to the limits of liability elected by the enrolled Financial Professional, see coverage question 2 of the Highlight Guide for more details. There is no Total Policy Aggregate applicable to all Insured Financial Professionals.

What is the retention under the Program?

There is a $5,000 retention per claim for all claims except:

$2,500 per Claim for accounting and tax services (other than audit services).
$5,000 per Claim for audit services rendered to an individual customer (audit services rendered to firms/entities excluded from coverage).
$10,000 per Claim for Trade Errors.
$10,000 per Claim involving Fraudulently Induced Client Funds Transfers

Does the policy cover Prior Acts Coverage?
Financial Professionals Errors & Omissions Liability

Yes, your Prior Acts Date is the earlier of your date of affiliation with Avantax, HD Vest, 1stGlobal or the date you first obtained—and continuously maintained— a “claims made” professional liability policy. For Financial Professionals that contract with Avantax after 12/31/24, a sub-limit in the amount of $1,000,000 Each Claim/$1,000,000 Aggregate per Insured Financial Professional will apply to prior acts claims.

Accountants Professional Liability

Yes, your Prior Acts Date is the date you first obtained—and continuously maintained— a “claims made” Accounting professional liability policy.

What happens if my affiliation with Avantax terminates during the policy period?

If your affiliation with Avantax terminates during the policy period, coverage automatically ceases on the date of termination. The Participation Fee under the E&O Program is considered fully earned, and, in the event your affiliation with Avantax is terminated during the policy period for any reason, there will be no return of your Participation Fee. However, depending on the reason for your termination, an automatic Extended Reporting Period (ERP) may be available to you at no cost. An ERP allows you to report new claims that are first made and reported during the ERP arising out of an actual or alleged covered negligent act committed on or after your affiliation date with Avantax and on or prior to your termination date.

Please be advised that if your affiliation with Avantax is terminated for:

General Reasons: an automatic one (1) year ERP shall be provided to you at no cost;
Retirement, Disability or Death: an automatic unlimited ERP shall be provided at no cost; or
Disciplinary Reasons: an automatic ninety (90) day ERP shall be provided to you at no cost.

Please Note: FPs planning to retire must terminate their registration with Avantax by December 31, 2024 to be eligible for the ERP. FPs retiring after December 31, 2024 must enroll for 2024-2025 E&O coverage in order to qualify for the ERP benefits referenced above. Enrollment fees will not be prorated for terminations occurring after the new coverage year has begun. If you have any other Professional Liability policy, any applicable ERP referenced above shall not apply.

What happens if I sell, or otherwise discontinue my accounting practice but continue my insurance, securities, and investment practice?

Berkshire Hathaway will continue to provide prior acts coverage for claims arising out of Accounting Services alleged to have occurred on or after your Accounting Prior Acts Date (see FAQ #10.b.) and on or prior to the date you sold your accounting practice, provided you’re main actively contracted with Avantax and enrolled in the Avantax Sponsored E&O program at the Basic level to cover your insurance, securities and investment practice. If you later decide to resume Accounting Services and wish to obtain coverage for Accounting Services through the Avantax Sponsored E&O program, you must re-elect the Basic Plus coverage level, which includes Basic level coverage for your insurance, securities and investment practices, plus coverage for Accounting Services.

Please note, if you terminate your contract with Avantax and at the time of your termination you have not elected the Basic Plus coverage level, any automatic ERP you may be provided under the terms of the policy will not include the Accounting extension.

If I am required to enroll in the E&O Program, can I obtain alternative E&O coverage (e.g. Opt-Out)?

Only Financial Professionals who are residents of or work in the State of New York will be provided the opportunity to opt out. Any alternative E&O insurance policy you obtain must satisfy Avantax’s opt-out criteria and you must follow Avantax’s instructions for opting-out (see FAQ #15-16).

What are Avantax’s Opt-Out Criteria?

A Financial Professional’s alternative E&O insurance policy must provide, at a minimum, the following coverage:

Professional Liability coverage for Avantax Investment Services, Inc.; Avantax Advisory Services, Inc., Avantax Insurance Company, LLC, Avantax Insurance Services, Inc. and their respective owners, subsidiaries and affiliates (collectively, “Avantax Entities”). This means all Avantax Entities must be listed as an Additional Insured on your E&O policy and on the required documentation you submit to Avantax evidencing your proof of coverage. Please note that many insurance carriers will not do this. By submitting your opt-out form you are attesting that Avantax is covered in the same manner under your alternative coverage and that you will be responsible for any differences in coverage;
Coverage for the sale of all securities approved by Avantax Investment Services, Inc. as well as investment advisory services provided through Avantax Advisory Services, Inc., including discretionary trading if applicable;
Coverage for the sale of life, accident & health insurance and fixed annuities approved by Avantax Insurance Company, LLC and Avantax Insurance Services, Inc.;
An annual limit of liability of at least $1,000,000 per claim/$1,000,000 aggregate per Insured;
An automatic one-year (minimum) Extended Reporting Period (ERP) for any claims involving acts that are alleged to have occurred while you were affiliated with Avantax. This will cover claims first made and reported during the ERP arising out of acts committed prior to your Avantax termination date; and
Prior acts coverage dating back to at least the later of (1) the date of your affiliation with Avantax, or (2) January 1, 2008.

How do I notify Avantax that I obtained alternative E&O coverage that satisfies Opt-Out requirements?

To opt out of the Avantax E&O Program, Financial Professionals must sign and return an Opt-Out Form with proof that alternative E&O insurance coverage meets the opt-out requirements (e.g. a current certificate of insurance, policy, and all relevant endorsements), no later than January 15, 2025. Opt-Out Requests and requirement documentation can be sent via email to the Avantax Compliance Department at compliance@avantax.com or by Fax to 972-870-6705. If you currently have coverage and are comparing your current plan to the Avantax sponsored E&O Program, make sure you understand the coverage, exclusions, retentions, and policy upgrades available to you.

Please do not submit the Opt-Out Form unless you have met all of the alternative coverage requirements and are eligible to opt out.

What if I don’t enroll, will I be automatically enrolled?

Financial professionals who are required to participate but do not provide satisfactory proof of alternative E&O coverage by December 16, 2024, or do not enroll by January 24, 2025, will be automatically enrolled as follows:

If you were enrolled from May 1, 2024 - December 31, 2024 you will be automatically re-enrolled at the same coverage level elected during the that same policy period. Financial Professionals who did not participate in the program from May 1, 2024 - December 31, 2024 are required to enroll for the first time effective December 31, 2024 and will be enrolled at the basic coverage and limit (securities, insurance and cyber coverage at the $1,000,000 limit) if they have not already enrolled before December 31, 2024. The full annual E&O Participation Fee will be automatically debited from your commissions in late January. You are encouraged to enroll yourself in the program as soon as possible to ensure that you receive the level of coverage that you would prefer and that you receive a certificate of insurance timely. FPs who are required to participate but do not enroll on their own before the January 24, 2025 enrollment deadline will receive their certificate via email on or after February 25, 2025.