Real estate agent, mortgage lender, down payment — these are all standard terms associated with buying a home in BC and other provinces in Canada.
Before you start searching for a new home, you should take a moment to familiarize yourself with some commonly used real estate terms.
If this is your first time around the block, one of the most important (and overlooked) real estate terms that you should familiarize yourself with is new home warranty BC.
Knowing what a new home warranty is and how it works can ensure that you know how to use it if something happens to your recently purchased home. Similarly, understanding the differences between a BC new home warranty and your home insurance coverage is also beneficial.
What is home warranty insurance and why is it important in BC?
A new home warranty is a type of third-party coverage that protects homeowners in BC against structural issues caused by poor workmanship or sub-par materials. New home warranties can also cover issues related to your home’s building envelope or mechanical systems.
In some cases, homeowners can obtain additional protection, which can cover temporary living expenses, moving and storage costs (if the home is deemed uninhabitable).
Here’s a simple example of how new home warranties work in BC:
A home builder incorrectly installs the wiring in your home, which leads to an electrical fire 18 months later. Due to the fact that the incident falls within the time constraints (more on that later) and the builder caused the incident, the homeowner would be eligible for coverage through their new home warranty.
As you can see, new home warranties are important in BC because they protect homeowners from issues caused by the builder, which is out of their control in most cases.
What does a new home warranty cover in BC?
The province of BC uses what is known as the “2-5-10 minimum” rule when it comes to new home warranties. A 2-5-10 new home warranty covers certain issues for specific periods of time (two, five and ten years).
This begs the question, “what does a 2-5-10 warranty cover and how long does the coverage last?”. Here’s how a 2-5-10 new home warranty works in BC:
Two-year coverage
The two-year portion of your warranty covers the following:
12 months on detached homes and non-common property, 15 months on stratas and 24 months on:
- Electrical, plumbing and HVAC-related delivery and systems
- Issues with cladding, caulking, windows and doors resulting in physical property damage
- Problems that cause the home to be uninhabitable
- Building code violations
Five-year coverage
The five-year portion of your new home warranty covers issues in the building envelope. Homeowners should note that this portion of the warranty also includes water penetration.
Ten-year coverage
The ten-year portion of your new home warranty covers general structural damages caused by the builder and/or the materials that were used during the building process.
New home warranty insurance BC — how do you get it?
As stated in the Homeowner Protection Act, home builders in BC are required to offer new home warranties to homeowners (since 1999). So, if you’re planning on buying a new home that a licensed property builder built, then you will automatically get a new home warranty.
A handful of other Canadian provinces work in a similar manner, including:
- Ontario
- Quebec
- Alberta
New home warranties are required in the other Canadian provinces, but builders that are interested in joining the Canadian Home Builders’ Association will need to offer warranties.
What’s the difference between a new home warranty and home insurance coverage?
New home insurance warranties and home insurance are quite similar — their primary purpose is to financially protect homeowners from things that are out of their control.
However, there are some key differences between the two options that homeowners should be aware of in BC.
As we mentioned earlier, a home warranty protects homeowners from structural damage (and other similar issues) that are caused by the builder.
In contrast, home insurance protects homeowners from risks and perils (home insurance lingo for an unavoidable or foreseeable event). Some examples of risks and perils include:
- Fire and smoke
- Wind
- Falling objects
- Theft
- Vandalism
In some cases, your home insurance will also cover expenses related to mechanical system damage that your warranty doesn’t.
For instance, imagine that the builder incorrectly installed a particular aspect of your plumbing system. The issue goes unnoticed for 12 months but eventually causes water damage in your home. Your new home warranty may not cover all of the expenses associated with the event (in many cases, they just cover the replacement/repair cost of the issue).
Thankfully, if you have home insurance, your provider can cover the remainder of the expenses (depending on the type and level of coverage that you have).
Do you want to save on home insurance in BC?
While we’re on the topic, we know how expensive home insurance can be in BC, especially if you live in a large city. Thankfully, you don’t have to settle for subpar coverage in order to find a policy that works with your budget — you can team up with a Surex insurance advisor instead.
Our team of insurance advisors are always happy to answer any questions that you have about finding a home insurance policy that complements your new home warranty.
Call or click to start taking advantage of the savings today!
New home warranty BC owner builder exemption — what is it?
If you’re planning on building your own home, you should be aware of the owner builder exemption in BC.
Simply put, individuals who choose to build their own home are financially responsible for any issues that a new home warranty would usually cover. Homeowners that build their own homes are accountable for these expenses for ten years.
If you purchased a home from an owner builder and notice that an issue has occurred, you need to contact the previous owner. The previous owner builder is responsible for said costs. However, the current owner needs to contact the previous builder owner within ten years.
