Home Warranty Insurance: What Homeowners Need to Know

What is home warranty insurance?

All new homes built by a Licensed Residential Builder must have home warranty insurance. This insurance protects new homes in British Columbia against certain construction defects, including issues with materials and labour, the building envelope, and structural components.

It covers problems with how the home was built—not cosmetic issues, personal preferences, or contractual expectations. Understanding how home warranty insurance works helps you know what protection you have as a homeowner or buyer.

Read the full guide: Home Warranty Insurance in British Columbia

Home Warranty Insurance in British Columbia Brochure

Tips to help homebuyers and homeowners understand the basics of home warranty insurance, and their rights and responsibilities.

  Home Warranty Insurance in British Columbia Brochure

What home warranty insurance covers

Home warranty insurance covers specific construction defects for set periods. Better known as 2-5-10 home warranty insurance, it includes: 

2-year materials and labour

Covers defects in materials and labour for your home’s construction.  Some limits apply, including:

• 12 months: detached homes and non-common property in strata units
• 15 months: common property in multi-unit strata buildings
• 24 months: (applies to all new homes) major systems (electrical, plumbing, heating, ventilation, and air conditioning), exterior cladding, windows, doors, and defects that make the home unfit to live in

Coverage also includes Building Code violations if they create a health or safety risk or are likely to cause material damage to the home.

5-year building envelope

Covers defects in the building envelope, including unintended water penetration that could cause damage

10-year structural defects

Covers defects in load-bearing parts or the overall structure of the home, including defects that make the home unfit to live in.

Note:  These are the minimum coverage requirements under the Homeowner Protection Act. Some policies may provide additional coverage — always read your policy documents.   

When does coverage start?

Coverage begins at different times depending on the type of home:

• Custom detached homes: Occupancy or first occupancy permit, whichever comes first
• Speculative detached homes: First occupancy or transfer of title, whichever comes first
• Strata unit: First occupancy or transfer of title, whichever comes first
• Common property in strata buildings: First-unit occupancy or transfer of title, whichever comes first 

Note: Coverage stays with the home, not the owner. If you sell your home, the remaining warranty transfers to the new owner.

Coverage limits  

The maximum amount you can claim depends on the type of home:  

• Detached homes: Lesser of the first owner’s purchase price or $200,000
• Strata units: Lesser of the first owner’s purchase price or $100,000
• Common property: Lesser of $100,000 per unit or $2.5 million per building 

Exclusions

The Homeowner Protection Act Regulation allows insurers to exclude certain items.  

General exclusions can include: 

• Landscaping
• Non-residential detached structures (parking structures, recreational and amenity facilities in multi-unit buildings are covered)
• Roads, curbs and lanes (driveways are covered)
• Site grading and surface drainage

Defect-related exclusions can include:

• Normal wear and tear
• Labour, materials and design supplied by the owner
• Damage caused by others or natural events
• Failure of an owner to prevent or minimize damage

For the full list of permitted exclusions, read your policy or the Homeowner Protection Act and Regulations.

Your warranty policy

Your policy is a legal contract with the warranty provider.  It explains:  

• What is covered and not covered  
• When coverage ends  
• Any limits on claims  
• How to contact the provider  

Read your policy carefully and get legal advice if you are unsure about your rights or coverage. 

Exemptions and special cases

Some homes do not require home warranty insurance:  

• Owner-built homes:  
  • The owner builder is responsible for defects for 10 years after occupancy
  •  Buyers must contact the owner builder directly if defects are found
• Homes on First Nations lands:  
  • Homes on reserve lands are exempt, but builders may choose to provide warranty coverage voluntarily
  • Homes on Treaty lands must meet all licensing and warranty requirements
• Special types of buildings:  
  • Hotels and motels, care facilities, dormitories and floating homes (must not be strata-titled)
  • Manufactured homes, including mobile homes (CSA-Z240) and factory-built homes (CAN/CSA-A277)  
  • Multi-unit rental buildings (restrictive covenant must be registered on title)  

If you are buying a home that might fall under one of these categories, ask the builder or seller for details about coverage.

Disclaimer

The summary on this page is for general guidance only. It does not replace the Homeowner Protection Act and Regulation.

 For complete information, always review the legislation and your home warranty insurance policy.