Canadian Underwriter

Insurance provisions in Ontario home inspector licensing bill helps reduce sellers’ liability exposure: MPP

December 2, 2016   by Canadian Underwriter

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A bill before the Ontario legislature could pave the way for regulations “prescribing the types of insurance” that home inspectors must have, and also proposes to prohibit people from performing home inspections without a licence.

Bill 59 was generally well received by opposition members, including Teresa Armstrong, a former insurance broker.

“As an insurance broker, when we had people purchase new homes, we had insurance inspections go out to make sure that the home was functioning properly for services like furnace, roof, plumbing and electricity,” said Armstrong, NDP MPP for London-Fanshawe, during debate on Bill 59 Wednesday. “We understood at that point how important it is for the functionality of the home and to insure it for losses.”

Ontario legislature at Queen's Park in Toronto, Ontario government

Tabled Nov. 3 at Queen’s Park in Toronto, the omnibus bill, if passed into law, would create the Home Inspection Act 2016.

Right now, “there are no mandatory qualifications that a home inspector working in Ontario must possess,” government and consumer services minister Marie France Lalonde told the legislature during a recent debate. “Various home inspection associations set different qualifications, resulting in various levels of competency across the home inspection field. If consumers receive a poor quality or incomplete inspection report when buying or selling a home, they are at risk of being left with unexpected costs or could lose a sale. It could even lead to a health and safety risk.”

Earlier this year, Bill 165 – a private member’s bill tabled by Liberal MPP Han Dong – was referred to the Standing Committee on Regulations and Private Bills.
Bill 165 also proposed a licensing scheme for home inspectors and proposed to let the Ontario government make regulations “prescribing the types of insurance” they must have, such as errors and omissions and commercial general liability.

The insurance provisions in Bill 59 will “help sellers breathe easier as their exposure to a liability risk will be decreased,” said Jim McDonnell, Progressive Conservative MPP for Stormont-Dundas South Glengarry. “If I sold a defective home to anyone today, I would expose myself to the possibility of being sued for damages and would have to prove that I did not know of the defects at the time of sale,” he added during debate Nov. 21.

Lalonde suggested Nov. 16 that if Bill 59 is passed into law, home inspectors would be overseen by “an independent, not-for-profit corporation funded by licensing fees collected from individuals and businesses in the regulated sector.”

That new organization “would be responsible for overseeing complaints from consumers,” she added.

Bill 59 lets the government and consumer services minister make regulations “governing the insurance” that licensed home inspectors must have, including, “prescribing the types of insurance they must have” and “prescribing the minimum amounts for which they must be insured under each type of insurance.”

Bill 59 “would create a regulatory authority for home inspectors that would require funding, collected through licensing fees, in order to run,” McDonnell said. “The first attempt to establish such an authority was through a private member’s bill in the previous session, where we highlighted that the government needed to take the legislative initiative themselves, consult extensively with the profession, homeowners and consumer advocates, and prepare both the legislation and the enabling regulations in a coordinated manner.”

Bill 59 – which he characterized as a “new incarnation” of Bill 165 – “also contains several new provisions related to the conduct of inspectors, investigations and disciplinary proceedings, as well as the explicit creation of an appeals committee. The PC caucus welcomes such changes.”

If passed into law, Bill 59 “would adopt a technical standard for home inspection to define what must be inspected,” Lalonde said. “It would standardize home inspection reports and contracts to protect clients and make it easier for them to understand what they are signing. It would set out insurance requirements that balance risk and costs for both the industry and consumers.”

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