Buying or owning a newly built home in British Columbia comes with important protections—one of the most significant being home warranty insurance. Understanding how this coverage works can help you protect your investment, know your rights, and avoid costly surprises down the road.

Below is a clear guide to home warranty insurance in BC, including what it covers, when coverage starts, limits, exclusions, and special cases.

What Is Home Warranty Insurance?

In British Columbia, all new homes built by a Licensed Residential Builder must have home warranty insurance. This insurance protects homeowners against specific construction defects related to:

• Materials and labour

• The building envelope

• Structural components

Home warranty insurance covers how the home was built, not cosmetic issues, personal design preferences, or unmet contractual expectations. Understanding this distinction is key for new homeowners and buyers.

What Does Home Warranty Insurance Cover?

Home warranty insurance is often referred to as 2-5-10 coverage, reflecting the length of protection for different components of the home.

2-Year Materials and Labour Coverage

This covers defects in materials and labour used in construction, with specific timeframes:

• 12 months: Detached homes and non-common property in strata units

• 15 months: Common property in multi-unit strata buildings

• 24 months (all new homes):

  • Major systems (electrical, plumbing, HVAC)

  • Exterior cladding, windows, and doors

  • Defects that make the home unfit to live in

This period also includes Building Code violations if they pose a health or safety risk or are likely to cause material damage.

5-Year Building Envelope Coverage

Protects against defects in the building envelope, including unintended water penetration that could cause damage to the home.

10-Year Structural Defects Coverage

Covers defects in load-bearing components or the overall structure of the home, including issues that make the home unsafe or uninhabitable.

Important: These are the minimum coverage requirements under the Homeowner Protection Act. Some policies may offer additional coverage, so always review your policy documents carefully.

When Does Home Warranty Coverage Start?

Coverage start dates depend 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

• Strata units: First occupancy or transfer of title

• Common property (strata): First unit occupancy or transfer of title

Good to know: Home warranty insurance stays with the home, not the owner. If you sell, the remaining coverage transfers to the new owner.

Home Warranty Coverage Limits

The maximum claim amount depends on the home type:

• 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

What Is Not Covered? (Exclusions)

Under the Homeowner Protection Act Regulation, insurers may exclude certain items.

Common General Exclusions

• Landscaping

• Non-residential detached structures

• Roads, curbs, and lanes (driveways are covered)

• Site grading and surface drainage

Defect-Related Exclusions

• Normal wear and tear

• Owner-supplied labour, materials, or design

• Damage caused by others or natural events

• Failure by the owner to prevent or minimize damage

For a complete list of exclusions, review your policy or the Homeowner Protection Act and Regulations.

Understanding Your Warranty Policy

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

• What is covered and excluded

• Coverage periods

• Claim limits

• How to file a claim and contact the provider

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

Exemptions and Special Cases

Some homes may be exempt from mandatory 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 regarding defects

Homes on First Nations Lands

• Homes on reserve lands are exempt (coverage may be voluntary)

• Homes on Treaty lands must meet full licensing and warranty requirements

Special Building Types

• Hotels, motels, care facilities, dormitories, and floating homes (non-strata)

• Manufactured and factory-built homes

• Multi-unit rental buildings with a restrictive covenant on title

If you are purchasing a home that may fall into one of these categories, confirm warranty details with the builder or seller before completing the purchase.

Disclaimer

This article is provided for general information only and does not replace the Homeowner Protection Act or its Regulations. For complete and accurate information, always review the legislation and your specific home warranty insurance policy.