Buy Smart, Build Smart

What is 2-5-10 home warranty insurance?

Under the provincial Homeowner Protection Act (Act), Licensed Residential Builders who build new homes with building permits applied for on or after July 1, 1999 must be enrolled in a third-party home warranty insurance program that protects buyers against construction defects.

The home warranty insurance now mandatory in B.C. provide buyers of new homes with the strongest protection against construction defects available in Canada.

Only insurance providers approved by the B.C. Financial Institutions Commissions can insure home warranties. The warranty is attached to the home, not the owner, and remains in effect upon re-sale until the coverage expires.

This legislation applies to both detached and multi-unit homes built in B.C. An exception is owner-built homes which are exempt from the licensing and warranty insurance requirements.

What is covered

The Act sets out a minimum standard of coverage that provides 2 years coverage on labour and materials (some limits apply), 5 years on the building envelope, and 10 years on the structure for new homes constructed by Licensed Residential Builders.

When does coverage start

For both strata-titled and fee simple homes, coverage starts on the earlier of two dates:

• When the new home is first occupied; or
• When the title to the new home is transferred to the first owner.

Coverage on the common property of a strata-titled developments starts when coverage on the first unit occupied or sold begins.

What is not covered

Mandatory home warranty insurance does not cover things like landscaping, fencing, patios, planters and non-residential detached structures like sheds, garages, carports or outbuildings. Weathering and normal wear and tear are not considered defects, and are also excluded from coverage.

Get it in writing

Buyers of new or re-sale homes covered under warranty insurance should ensure they get in writing a list of expiry dates of the policy attached to the home and any common property from the warranty provider, builder or seller.

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