Professional Insurance

Mandatory Insurance

Insurance-claimsThe probability of Licensing of the Home Inspection Profession in Ontario has raised the issue of Professional Indemnity Insurance.

Whenever licensing is introduced, one of the commitments required of the Inspector is going to be mandatory professional Indemnity Insurance.  This means Errors & Omissions and General Liability Insurance.

Currently, there are few companies offering this insurance to Inspectors in Canada.  The one OntarioACHI has recommended to it’s members for the last three years is from HUB International.  This does not mean that the volunteers at OntarioACHI have not been searching for better plans.

OntarioACHI Recommended plan

Currently,  Hub offer all inspectors across Canada a Home Inspect Plan that offers coverage from $500,000 per claim/$1,000,000 aggregate coverage.   OntarioACHI has negotiated for its members a 10% discount on the base price with an extra 2.5% discount for CCHI or CMI members.

Even with these discounts, the premiums range anywhere from $2,000 to $3,800 per year for the most basic coverage allowed by the plan.   The HUB plan does have some coverage for ancillary claims such as mould, asbestos and allegedly drones, but we have as yet been unable to access comprehensive wording to identify what level of coverage.

Each time we are issued with renewals the questions are asked as to why the premiums are so high.  The response always comes back, “because of the defence costs”.

Other avenues

We have been working with other organisations in the areas that bound liability issues, and an example of a profession that is subject to as much litigation as the Home Inspection Profession is Real-Estate Appraisers.  In general, REA’s are landed with as many claims as Home Inspectors, and like home inspectors, many of these claims are frivolous.  One would think that the “defence costs” both both these would be the same.  Yet the annual premium from REAs is less than $1,500 each year.  That is half what Home Inspectors are being charged.

Over recent months, OntarioACHI have been working with Gilles Larin in Quebec to try to establish a cross Canada program for insurance for Home Inspectors and at the same time continued to work with Mac-Vanderhout and Marsh (brokers) to ascertain if another avenue is open to our profession.

In each case, the need for size of market and loss-runs from the existing insurers are required.  This is because in order for an underwriter to gauge the level of risk of a portfolio, existing information is required.

Options investigated.

We continue to investigate a number of options.  These include:

  • Centralised insurance of the Association mandated for membership
  • Captive Insurance
  • Compartmentalised programs, (basic cover plus enhanced endorsements)
  • Self-insuring

All options have the same underwriting issues.

The size of the market is easy to gauge, especially as mandatory insurance is going to be forced upon inspectors in Ontario, as it already has been in Alberta and British Columbia.   Indeed as part of the requirements for obtaining the Canadian Certified home Inspector (CCHI) designation, and inspector is required to maintain professional liability insurance.  Unlike other associations who allow their inspectors to have a waiver for this important piece of business protection, OntarioACHI realised very early on that while E&O insurance is a large business expense, it offers the Inspector real security for time when they might make a mistake.  With the downturn in the global and domestic economy, and the uptick in home prices it is likely that this protection is going to a fundamental tool for business survival.

Establish what the costs of your premium are really made up of

There has long been a belief in the profession that that much of the costs of premiums for professional insurance goes in profits, funds and fees to the brokers, and not to the “defence” of claims.  In order to prove to new underwriters that this is (or isn’t) the case we need to obtain concrete loss-run information for insurance holders.

Risk meterWe have had very little success at getting loss-run information as an Association, mainly becasue we do not hold the policies for the insurances of our members, each member holds their own.   If inspectors are interested in getting their premiums set to a realistic price, we would ask that they contact their insurance brokers and make a straight request for the loss-run of their policy for the last 5 years (or time it has been in effect if less)

The Insurance brokers MUST satisfy this request.  Once you have obtained this, if you are prepared to send these loss-runs to OntarioACHI, we will be able to re-engage with the companies we have been working with to try to develop a plan that is more aligned with the real costs of risk management on our profession.

We will be offering this service to ALL inspectors across Ontario, not just OntarioACHI members, and so the offer to collate the loss-run information is also open to all inspectors.

What you will need to do.

Cut and past the template of the loss-run request to your headed notepaper.  Send the request to your current broker.   If after 2 weeks you have not had a reply send an email to your broker reminding them of your request.  If after 2 more weeks you have not had a reply, contact us at highinsurance@ontarioachi.ca, and we will collate the non-responses and contact the supervisor at the FSCO.

Once you have the loss-run report, it is important that you get it to us immediately.  Again you can either send it via email to highinsurance@ontarioachi.ca or via post to our mailing address.   We will then ensure that your loss-run information is accounted for by the underwriters we are talking to.

This is an area where we can only do so much.  Without your input into this effort, we will all be at the mercy of the Insurers who will continue to hide behind the “Defence Costs” argument for charging high premiums.

Sample Loss-run request.

+++++++++++++  Cut and Paste this letter to your headed notepaper    +++++++++++++++++++
Date: Thursday, June 30, 2016
To:        ______________________________________
Re policy #:    ______________________________________
Insured name:    ____________________________________
To whom it may concern:
Please release by return currently dated loss runs for all years covering the above listed insured.   The loss-run should be mailed, emailed or faxed to us at the relevant address below.
Feel free to contact us directly if you have any questions.
Faithfully,

Your Name:          _____________________________________
Your Company:    _____________________________________
Your Title:             _____________________________________
Address:               _____________________________________
                              _____________________________________
City:                      ____________________________
Postcode:            __________________
Fax Number:       __________________
Email Address:   _______________________________