Canadian Underwriter

What four home insurers told the auditor general about illegal electrical work

December 8, 2020   by Greg Meckbach

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Some Ontario homeowners could collect insurance money on property claims even if the damage was caused by illegal electrical work, the auditor general suggests in her report released Monday.

Staff with the province’s Office of the Auditor General contacted four major home insurers in Ontario to find out if they would deny claims for damage caused by faulty electrical work that was not inspected by the Electrical Safety Authority.

“All four insurers informed us that they do not require that electrical installations be inspected by the ESA and that they would pay out the claims,” Ontario Auditor General Bonnie Lysyk wrote in the report tabled Dec. 7 in the legislature. “Two of the insurers said that after paying out such a claim, they might consider cancelling the policy if the installation was not done by a licensed contractor, but not if it was not inspected by the ESA.” 

In Ontario, it is illegal to perform most electrical installations without notifying the ESA. Property owners who do their own electrical work (instead of hiring a professional) must notify the ESA. If the property owner hires a licensed electrical contractor, that contractor should file the notification with the ESA.

Lysyk did not name the four insurers contacted by her staff in the value-for money audit on the Electrical Safety Authority. That was one of 13 auditor general reports released Dec. 7.

The ESA’s powers include licensing electrical contractors, licensing master electricians, and inspecting electrical work on a construction or renovation project to ensure it complies with the province’s electrical code.

“Homeowners may not be aware of the risks of having electrical installations put in by anyone other than licensed electrical contractors,” Lysyk wrote in the audit on the ESA. “Certified and Master electricians are not permitted to perform electrical installations on their own. They must be working for a licensed electrical contractor business, which carries insurance and is registered with the Workplace Safety Insurance Board in order to legally perform electrical installations.” 

One of Lysyk’s key findings is that the ESA has been unsuccessful in preventing illegal electrical installations in Ontario. She recommends that the Ministry of Government and Consumer Services, along with the ESA, work with municipalities to determine whether ESA inspections can be incorporated into the building permit assessment process.

As part of their audit of the ESA, auditor general’s office staff approached chief building officials at five Ontario municipalities. They said municipal staff do not verify whether or not homeowners who are obtaining building renovation permits are notifying the ESA of electrical work, as required by law. Those municipalities were not named.

The auditor general’s staff also discovered widespread online advertising by illegal unlicensed people offering to perform electrical work that is only supposed to be done by licensed electrical contractors.

In Ontario in 2019, miscreants posted an average of 166 advertisements each day in the “for-hire-electricians” category, according to the auditor general’s report.

This past July, staff with the Office of the Auditor General responded to 20 such advertisements offering a quote for new wiring installation. The quotes ranged from $150 to $1,100.

None of those “for-hire electricians” were licenced by ESA; all of them strongly discouraged the auditor general staff from notifying the ESA of their proposed electrical work.

That said, the auditor general’s report said the state of electrical safety in Ontario has improved over the last 10 years. The report included statistics on electrical fires from 2009 through 2018.

There were 1,626 electrical fires in Ontario in 2018, down from 1,695 in 2017, and 2,296 in 2009, according to the report. Of the 1,626 electrical fires in 2018, 1,334 were residential, 97 industrial, 54 institutional (including includes schools, arenas, libraries, churches, day care centres and funeral homes), 50 retail, 49 commercial and 42 were at health or detention facilities.

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2 Comments » for What four home insurers told the auditor general about illegal electrical work
  1. Brijanand+Goberdhan+FCIP+ACII+DipInsTT says:

    A teaching moment! The Insurance industry could consider partnering with the ESA to educate/inform homeowners about the law regarding electrical work done in a home and the value of following the law to life and property. It becomes confusing to many on what they can and cannot do or who can perform work under certain circumstances so education may improve this. The rigidity of the law may be contributing to work by unlicensed persons. The law should not demand as a prerequisite that these licensed electricians be insured for Liability through an Electrical Contractor; rather the collective concern should be that they are properly licensed. Liability Insurance is a business element that the homeowner should decide on and as the article alluded, insurers are on board with this approach if the insured is exercising good risk management by hiring a Certified/Master Electrician. It also allows them fair opportunity to earn a living instead of dodging the ESA.

  2. Raymond says:

    The photograph attached to this article has a number of errors. It obviously was not taken anywhere in Canada and probably a stock picture.

    This photograph would be a great idea for a winter contest as to which insurance assessor can pick out the glaring errors in it. Hint the letters CSA may mean something.

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