3.6.2.3.Insurance Coverage

(1) The insurance policy, (a) shall indemnify the registered person against liability imposed by law arising out of the performance of or the failure to perform services as a registered person during any time while the person is registered under Sentence 3.2.4.2.(1) or 3.4.3.2.(1) for claims that are first made and reported to the insurer during the period of insurance or during any extended reporting period required by Clause (1)(c), (b) shall set out the name of the registered person, (c) in the case of a registered code agency registered under Sentence 3.4.3.2.(1), (i) shall require an extended reporting period of two years for the purposes of giving notice of any claim or occurrence that the registered code agency could reasonably foresee might give rise to a claim, with respect to an event that occurs prior to the person ceasing to be insured, (ii) shall provide that the extended reporting period described in Subclause (i) shall commence on the day the registered code agency ceases to be insured, and (iii) shall require the registered code agency to make full payment of all premiums for the extended reporting period referred to in Subclause (i) as part of the premiums for the issuance of the insurance policy, (d) shall provide for insurance coverage to commence, (i) on the date the registered person becomes registered, or (ii) in the case of a registered person previously insured in accordance with this Article, on the expiry of the previous policy, (e) shall require the insurer to provide prompt written notice to the director if the policy is declared void for material misrepresentation, (f) shall specify a limit of indemnity for any one claim and in the aggregate during any one period of insurance that is not less than, (i) in the case of persons registered under Sentence 3.2.4.2.(1), (A) $1,000,000 per claim and $2,000,000 in the aggregate, if the person billed $100,000 or more in fees in the 12 months immediately before the issuance of the policy, (B) $500,000 per claim and $1,000,000 in the aggregate, if the person billed more than $50,000 and less than $100,000 in fees in the 12 months immediately before the issuance of the policy, (C) $250,000 per claim and $500,000 in the aggregate, if the person billed $50,000 or less in fees in the 12 months immediately before the issuance of the policy, or (D) the limits of indemnity for any one claim and in the aggregate that are set out in Sub-subclause (A), (B) or (C), as determined by reference to the person’s estimated fees billings for the 12-month period immediately after the issuance of the policy, if the person has been registered less than one year before the issuance of the policy, and (ii) in the case of a registered code agency registered under Sentence 3.4.3.2.(1), $1,000,000 per claim and $2,000,000 in the aggregate, except that those limits shall apply exclusively to the exercise of the powers and performance of the duties of a registered code agency under the Act and shall be in addition to any insurance applicable to any other activities carried on by the registered code agency, (g) shall provide that any costs and expenses necessarily incurred by the insurer in the investigation, defence or settlement of claims under the policy shall not be part of the limit of indemnity set out in Clause (f) unless the limit of indemnity from any one claim exceeds $2,000,000, (h) shall not provide that the insured shall be responsible for the first portion of any sum that the insured becomes legally liable to pay in respect of a claim made against him, her or it in respect of any one claim or occurrence in an amount exceeding the lesser of, (i) $70,000, and (ii) 5% of, (A) the amount of fees billed by the insured in the 12 months immediately before the issuance of the policy, or (B) the amount of the insured’s estimated fees billings for the 12-month period immediately after the issuance of the policy, if the insured has been registered under Sentence 3.2.4.2.(1) less than one year before the issuance of the policy, (i) shall provide that it cannot be cancelled by the insured unless, (i) the insured immediately replaces the policy with another policy that satisfies the requirements of this Article, (ii) the insurer has given notice in writing of the proposed cancellation to the director, and (iii) the notice described in Subclause (ii) was received by the director at least 30 days before the day the policy is cancelled, (j) shall provide that it cannot be cancelled by the insurer unless, (i) it is cancelled for non-payment of a premium, (ii) the insurer has given notice in writing of the proposed cancellation to the director, and (iii) the notice described in Subclause (ii) was sent to the director at least 30 days before the day the policy is cancelled, (k) shall provide for the continuation of coverage if the insured is adjudged a bankrupt, insolvent, incompetent or dies during the period of insurance, and (l) may provide that coverage be subject to such exclusions and conditions and otherwise on such terms as are consistent with normal insurance industry practice from time to time.