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Invalid Professional Indemnity insurance

Submitted by: MikeC (Admin) on 26-Nov-07 06:54:38 PM

Quidos have been forced to suspend the accreditation status of the 137 DEAs who were corporately-accredited through HES due to a Professional Indemnity (PI) insurance policy which did not cover HES's sub-contracting DEAs, according to an email sent by Quidos to those affected.

Suspension will remain until/unless HES amend their PI policy to cover all its sub-contracting DEAs. Although, if there is a silver lining here, affected DEAs can switch to the Quidos Accreditation Scheme (and have legal PI cover) to "escape" the suspension.

I assume you would also be free to accredit elsewhere too, although as this fiasco explores the previously unexplored, you might want to check.

The Quidos email follows.

Quidos explanation

Dear HES candidate

Unfortunately we have to inform you of a separate situation to the on-going training issue and non-payment of the associated debt.

Over the past six weeks Quidos Accreditation Scheme has sought confirmation of the Professional Indemnity insurance that HES provide upon your behalf to trade as a DEA. This is a legal requirement as defined by the CLG in the accreditation of a DEA.

We have been provided with various communications from, or on behalf of HES, stating that HES have indeed got the appropriate insurance for their staff (be it permanently employed or sub-contracted), but we only finally managed to extract a copy very recently.

To our slight surprise that policy was only put in place in late October - coincident in fact with our asking for evidence of it, and as such we asked our insurance broker, as a matter of urgency, to analyse the HES policy.

What follows is a quote from a letter from AON Limited (Authorised and regulated by the FSA in respect of insurance mediation activities) dated 21 November 2007.

"When we turn to the definition of insured however, I have some serious concerns.

The insured described in the schedule is Home Energy Surveys Ltd and the schedule notes that there are no additional insured's to this policy.

If we then turn to the definition section of the policy, you will note that the term you/your is defined and this refers to the insured named in the schedule. It is clear therefore that the only insured is Home Energy Surveys Ltd.

The most important area of concern for you is that there is no cover provided to sub consultants that are not employees of HES, although an indemnity would be provided to HES in relation to work carried out on their behalf, insurers would have the right to subrogate against those sub consultants.

Connected to the same point is the fact that the policy does not indemnify any employee. Under this particular policy this is a problem as there is no waiver of subrogation rights against an employee which would be the minimum one would look for.

Ideally however, the policy should indemnify employees as well. The case of Merritt v Babb confirmed that an employee can be held liable for a claim where they have been negligent in the performance of the work on behalf of their employer.

As previously mentioned, the policy only covers the insured in relation to the activities carried out in respect of their business. This means that even if the policy were extended to include sub consultants, it would not provide cover in relation to the work outside of Home Energy Surveys Ltd."

In a nutshell, cutting through the legal jargon, if you have lodged an EPC via the Quidos Accreditation software, you will not have had any valid Professional Indemnity insurance. unless;

  • 1. You are a permanent employee of Home Energy Surveys Ltd; OR
  • 2. You have individual accreditation direct with Quidos (and hence have separate Quidos PI insurance cover)

Further, since there is no limit to the indemnity, if there were a claim against any work you have done - you would be personally liable, and possibly have a claim from your own pocket of up to £1 million.

Therefore, since it is our duty as an Accreditation scheme to ensure each member has adequate insurance, we have no alternative but to consider suspending each HES accredited member; unless:

1. You can prove you are, and continue to be, a permanent employee of Home Energy Surveys Ltd.

2. You have independent Quidos accreditation

We apologise for this further problem with your work as a DEA, but as you can understand, we have to act within the law.

We have also notified Northgate of this issue with regard to the inadequacy of HES insurance, and if you do have accreditation with them, you may want to check the validity of this.

Once again:

  1. 1. We have demanded HES provide adequate cover IMMEDIATELY and today; BUT FAILING THIS
  2. 2. You, as an individual, can join Quidos as an independently accredited DEA; hence being able to rely on the PI cover we provide as standard. (Details of this have been provided previously).

HES are aware of this, and have had until 2pm this afternoon to provide an acceptable solution should they so choose; but we simply cannot wait for what HES may or may not do.

Unfortunately if there has been no response from HES, we will be forced to suspend your accreditation. This will obviously be re-instated immediately HES sort out the insurance, or you join the Quidos scheme independently.

** UPDATE **

We have delayed sending this email until we had a response from HES. Also, we have spoken to the CLG about the situation and the confirm our view as to the action to take.

We received a communication from Mr Gordon Bell, MD of HES. He states:

"I see no reason to suspend or cancel DEA accreditation as it is just the wording of the policy that is to change and adequate cover is already in place.".

Further, HES's insurance broker writes in the same communication:

"Further to our discussions on Friday I can confirm that I have requested that Insurers amend the policy, by endorsement, of those Insured to show specifically that DEA's in the employment of Home Energy Surveys, acting as subcontractors of Home Energy Surveys commissioned by Home Energy Surveys to carry out an EPC or those DEA's who are trained by Home Energy Surveys and who carry out their own EPC's and process them through the Home Energy Surveys Corporate Accreditation."

Hence, confirming our fears that there is no valid PI insurance in place for self-employed DEAs.

It is with sincere regret we have to inform you that all HES corporate accreditations' are hereby suspended. We will of course keep you informed as to any further development.

It's a hell of a journey you guys are travelling - I can't imagine what rationale you use to cling on to the hope of reaching that elusive finishing line. I can only hope it's worth it for you in the end, truly.

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