It’s the strongest construction defect insurance in Canada.
This applies to all new homes constructed under building permits applied for on or after July 1, 1999 (or where construction started on or after July 1, 1999, in areas not requiring building permits), unless they are specifically excluded by the Homeowner Protection Act or regulations.
Minimum coverage
At a minimum, home warranty insurance coverage includes:
2 years on labour and materials (some limits apply)
5 years on the building envelope, including water penetration
10 years on the structure of the home
The two-year labour and materials coverage covers any defect in labour and materials for:
12 months on detached homes and on non-common property in strata units (including fee simple homes)
15 months on the common property of strata buildings
24 months on all new buildings for defects when related to delivery and distribution systems, such as air conditioning, electrical, heating ventilation, plumbing, etc.
The cost of the home warranty insurance is set by the providers.
There are some new homes with home warranty insurance coverage that exceeds the minimum requirement. The warranty is attached to the home, not to the owner of the home, and remains in effect upon the re-sale of the home until the coverage expires.
Strata-titled homes have two policies of home warranty insurance: one on the home and the other on the common property. Sometimes when the coverage of a new strata-titled home starts, the coverage on the related common property has already started — or expired. Coverage on the common property of strata-titled buildings starts when the first unit in the building is occupied or sold.
Owner builder exemptions
The most common exemption from the licensing and home warranty insurance requirements is a new home built under an Owner Builder Authorization.
Unless home warranty insurance is provided, owner-built homes are subject to the 10-year Statutory Protection provisions of the Act. These provisions hold the owner builder personally responsible to subsequent purchasers for any defects in labour, materials or design for 10 years after first occupancy.
If you buy such a home and find defects, you must contact the owner builder directly. Any action to remedy defects by a purchaser must be started within the 10-year period.
Further exemptions
The Act and Regulation also exempt the following classes of new homes from the requirements for home warranty insurance, registration fees, reconstruction fees and builder licensing:
Manufactured homes, including mobile homes (CSA-Z240) and factory-built homes (CAN/CSA-A277)
Hotels and motels
Dormitories
Care facilities
Floating homes
However, if any of the above (excepting manufactured homes) are strata-titled, they are deemed to be new homes and require home warranty insurance, registration fees and reconstruction fees (where geographically applicable).
The Act and Regulation exempt the following classes of “new homes” from the requirement for licensing, home warranty insurance, registration fees and reconstruction fees:
Multi-unit buildings owned under a single title and constructed for rental purposes
Multi-unit buildings that are strata-titled, but held under single ownership and constructed for rental purposes
Three or more dwelling units built for rental purposes and owned under a single legal title
In these cases, the owner must provide a restrictive covenant that is registered on the title restricting the sale of any dwelling unit for a 10-year period.
Commencement dates
Commencement dates on home warranty insurance are:
Fee simple (primarily detached dwelling units)
Custom homes: date of occupancy or date of first occupancy permit, whichever occurs earliest
Spec. (speculative) homes: date of first occupancy or date of transfer of legal title, whichever occurs earliest
Strata homes
Strata unit: date of first occupancy or date of transfer of legal title to first owner, whichever occurs earliest
Common property: date of first-unit occupancy or date of transfer of legal title, whichever occurs earliest
Exclusions
The Act and regulations say what the home warranty insurance companies can exclude from their policies.
General exclusions can include:
Landscaping
Non-residential detached structures (parking structures, recreational and amenity facilities in multi-unit buildings are covered)
Commercial use areas
Roads, curbs and lanes (driveways are covered)
Site grading and surface drainage
The operation of municipal services
Septic tanks and fields
Water quality and quantity
Defect related exclusions can include:
Normal wear and tear
Normal shrinkage of materials from construction
Use of new home for non-residential purposes
Labour, materials and design supplied by the owner
Damage caused by anyone other than the residential builder
Damage caused by insects or rodents
Failure of an owner to prevent or minimize damage
Acts of nature
Coverage limits
Coverage on claims works as follows:
Fee simple (primarily detached dwelling units):
The lesser of the first owner’s purchase price or $200,000
Strata homes:
Strata unit: lesser of the first owner’s purchase price or $100,000
Common property: the lesser $100,000 times the number of dwelling units in the building or $2.5 million per building
More resources
We have lots of extra help for owners and prospective homebuyers looking for more detailed information on home warranty insurance in B.C.
Our Guide to Home Warranty Insurance in British Columbia describes in greater depth how the home warranty insurance system works, what it covers, how to get the most out of it and what to do if you find a possible defect.
The Home Warranty Insurance in British Columbia: What You Need to Know to Protect Your Investment handbook has tips to help new home buyers and owners of new homes understand the basics of home warranty insurance as well as their rights and responsibilities.
Our Residential Construction Performance Guide can help you identify if a possible defect in design, labour or materials in your new home is covered by home warranty insurance.
The Homeowner Protection Act and Regulations detail all information about home warranty insurance, including:
Home warranty insurance documentation
Limits on coverage
Mandatory notice of expiry of warranty
Minimum standards of warranty coverage: this includes a description of what’s required to be covered under 2-5-10 year warranty insurance, commencement dates and more.
Owner’s duty to mitigate damages
Permitted exclusions – defects
Permitted exclusions – general
Permitted warranty terms
Transfer of warranty to subsequent purchasers (Schedule 2, section 2)
Related Content
Grants & Funding Opportunities
Buying or Selling an Owner-Built Home
Research Centre
Home Warranty Insurance Providers
How to Get Third-party Home Warranty Insurance
How to Use the 2-5-10 Year Home Warranty Insurance Logo
Regulatory Bulletins
Publications
Technical Research
Related Sites
Building Envelope Guide for Houses
Building Enclosure Design Guide
Building Envelope Thermal Bridging Guide
Best Practices for Window and Door Replacement in Wood-Frame Buildings
Building Envelope Renovation Regulation
Education Registry
Get it in Writing!
Homeowner Protection Act
Licensed Residential Builders Portal
New Homes Registry
Owner Builder Portal
Owner Builder (new application)
Public Registry of Residential Builders
coverage in home warranty, in home appliance warranty, sears in home warranty
Source: http://docphy.com/business-industry/business/home-warranty-insurance-new-homes.html
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