What’s Home Warranty Insurance? Builders must be licensed and arrange for third-party home warranty insurance before obtaining a building permit or starting construction on a new home.
Home warranty insurance protects homeowners from a range of construction defects for designated periods of time. At a minimum, home warranty insurance coverage includes: • Two years 1 on labour and materials (some limits apply) , including, for example, defects in material and labour supplied for electrical, plumbing and heating. • Five years on the building envelope , including the components that separate the indoors from the outdoors, such as exterior walls, the foundation, roof, windows and doors. • 10 years on the structure of the home , including defects that cause overall structural damage to the home. The requirement for a minimum 2-5-10 warranty insurance policy cannot be waived by any separate contract between the owner and the builder. Under the Homeowner Protection Act Regulation , certain exclusions are permitted to the home warranty insurance coverage. Homeowners should carefully review their home warranty insurance policy documents to understand the specific coverage details, what is excluded and under what conditions you risk limiting coverage. Although builders arrange for home warranty insurance prior to starting construction, the coverage does not take effect until the policy has commenced. It is important to emphasize that for a custom-built home (built on land owned by the
homeowner), the home warranty insurance policy does not commence until the date an occupancy permit is granted, the date the home is occupied, or the date the home was completed and ready to be occupied – whichever of these dates comes first. Homeowners cannot file a warranty claim for a construction defect until the policy is active. If the owner and the builder part ways before the policy has commenced, the commitment from the warranty provider to provide home warranty insurance coverage for the home may be cancelled. This is called a de-enrollment. If a de-enrollment occurs, there is no home warranty insurance coverage, and construction cannot proceed. If the homeowner is unable to resolve the issue with the original builder, they may need to find a new builder to complete the project and re-register the home for home warranty insurance coverage. This process can be particularly challenging if the construction is already well advanced, as finding a builder willing to take on the incomplete work of another builder can be difficult. Additionally, the original builder will not be obligated under the warranty policy to address any defects, which may leave homeowners with no choice but to pursue legal action if the builder refuses to repair the defects. De-enrollments cause stress, uncertainty and financial hardship for everyone. That’s why it is essential for homeowners to find a builder they can work with.
1 Covers any defect in materials and labour or violation of the Building Code for 12 months for all new homes, other than the common property of a strata corporation, and 15 months for the common property of strata corporations. Also covers defects in materials and labour supplied for the electrical, plumbing, heating, ventilation and air conditioning delivery systems, as well as for the exterior cladding, caulking, windows and doors, that may lead to detachment or material damage to the new home and violation of the Building Code for 24 months for all new homes, including the common property of strata corporations. Hiring a Builder in BC: A Consumer Protection Guide 7
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