How safe is B.C.’s mandatory home warranty insurance?

As a result of provincial legislation introduced in 1999, most buyers of new homes in B.C. are protected against construction defects by the strongest mandatory home warranty insurance coverage in Canada.

The Homeowner Protection Act (Act) was designed to increase the level of protection for new homebuyers and to improve the quality of residential construction in the province. It accomplished this through the creation of two programs: mandatory home warranty insurance against construction defects and mandatory residential builder licensing.

The Homeowner Protection Office (HPO) administers the requirements of the Act, a provincial Crown corporation that licenses residential builders and monitors the performance of the home warranty insurance system provided by the private sector. In addition the HPO provides information on a variety of topics of interest to the home buying public.

The law applies to most homes built under permits applied for since July 1, 1999. It covers both detached and multi-unit homes built throughout B.C. Owner-built homes are exempt from the licensing and home warranty insurance requirements.

Before the mandatory home warranty insurance program was implemented in B.C. in 1999, new home warranty coverage was optional. The terms and conditions of these warranties were not standardized. Backers of these warranties were not regulated and the warranties were not required to be an insurance product.

Today, a series of checks and balances in the home warranty insurance system protects buyers of new homes. Here’s how it works.

• Only government authorized warranty insurance providers can insure or underwrite home warranties.
• A list of these approved home warranty insurers is available through the Homeowner Protection Office.
• Home warranty insurance providers must follow the requirements of the Act and regulations, which sets out a minimum standard of coverage, allowable exclusions and requirements for claims handling.
• That minimum coverage includes 2 years on labour and materials, 5 years on the building envelope, including water penetration, and 10 years on structure.
• The Act also sets out a procedure for home warranty dispute resolution to help ensure that homeowners are treated fairly and their concerns dealt with in a timely fashion.

For more information on home warranties, builder licensing and other topics of interest to new home buyers, contact the Homeowner Protection Office at 1-800-407-7757 or visit their website at www.hpo.bc.ca.