New Home Warranty BC: The Complete Guide

New Home Warranty BC

New Home Warranty in BC provides protection for any new home built in British Columbia against construction defects. The program requires all homes built in British Columbia on or after July 1, 1999, to be covered by the home warranty insurance program unless it’s excluded by the Act or its regulations. The minimum coverage under New Home Warranty follows a 2-5-10 year coverage mandate, which all new homes are entitled to in British Columbia.

Why is New Home Warranty Required?

New Home Warranty is required to provide protection against construction defects that a home might have after completion. If the program did not exist consumers purchasing a new home or working with a builder would be left to deal directly with the builder regarding addressing any construction defects.

This type of assurance might become a problem if the builder goes bankrupt or decides to leave town after completing the construction of the home.

The idea behind new home warranty is to improve the overall building standards by setting certain minimum qualities that have to be met by a licensed builder or anyone who is constructing a new home.

The program works like a surety contract in which the individual constructing a home has to obtain insurance from one of the providers who offer warranty insurance coverage for the home. This ensures that insurance is in place for the home if there is a construction defect. When the general public purchases a home with a new home warranty coverage, they will have certain minimum defect coverages for the home.

If the builder goes bankrupt or leaves town, the insurance would still be in place as it’s less likely that the insurance company will go bankrupt. Therefore, the consumer can still work with the insurer to have their home’s defects addressed. The insurer will also have options to go after the bankrupt builder or if the builder continues to fail to meet their obligation the insurer might not renew the builder’s insurance, which will then prevent them from being able to continue building. Additionally, BC Housing requires all licensed builders to have and obtain insurance coverage. As such, builders who do not have this coverage are unable to become licensed builders.

What Does New Home Warranty Cover?

New Home Warranty provides certain coverage to a home that meets the requirement for new home warranty. The coverages provided are based on how long the policy has been in place. A new home warranty policy will provide the exact same coverage regardless of who built the home or the insurer who is providing and administrating the coverage.

Under the New Home Warranty, each home is provided with the following coverages;

  • 2 years of labour and material
    • includes 12 months of coverage for detached homes and non-common property strata units
    • includes 15 months for common property strata buildings coverage
    • includes 24 months of coverage for defects related to delivery and distribution systems related to the following;
      • Defects related to exterior cladding
      • Caulking
      • Windows or doors that may lead to detachment or material damage to the new home
      • Code violations of the Building Code that result in a health and safety risk or are likely to result in damage to the new home
      • Any defect that would make the home unfit to live in
    • 5 years on the building envelope, including water penetration
      • covers exterior walls, foundation, roof, windows and doors
      • Also covers any component that separates the indoors from the outdoors
    • 10 years on the structure of the home
      • Cover any defect in materials and labour that result in the failure of a load-bearing part of a new home
      • Any defect that causes structural

All repairs or replacements under a new home warranty claim are provided with a one-year additional coverage for material and labour or until the new home warranty coverage expires, whichever is later. Repairs are also expected to be completed in a reasonable and timely manner while ensuring they are to Building Code standards.

If a repair is required and due to the damage caused by the defect the homeowners are unable to reside in the home, a homeowner may be entitled to a living-out allowance of $100 per day.

What is not covered under New Home Warranty?

New Home Warranty isn’t meant to be a complete coverage policy for anything defective regarding the home. There’s an expectation that some defects are to be resolved by the homeowner and some items while they might be part of the construction of the build are not covered under the new home warranty program. Some of the items excluded from coverage include;

  • Septic tanks and fields, and water quality and quantity
  • Roads, curbs and lanes. Though this does not exclude a home’s driveway or walkway.
  • Site grading and surface drainage if not required by Building Code.
  • The operation of municipal services
  • Commercial use areas.
  • Any non-residential detached structures
  • Landscaping and detached swimming pools
  • Any design, material or labour supplied by the owner or someone else other than the registered builder or their works or sub-trades
  • Contract disputes (money owed or not paid is a legal dispute, not a new home warranty issue)

It’s really important as a homeowner to know that new home warranty isn’t a program meant to enhance the home’s value but rather meant to ensure the home meets certain minimum coverage and is built to a certain minimum standard. As such, defects that are a result of normal wear and tear of a home are not covered. Furthermore, the following specific defects can be excluded;

  • Normal shrinkage of material from construction
  • A defect that comes as a result of using the home for non-residential purposes (running an Airbnb business in a residential home for example)
  • Damage that was caused by the homeowner or someone else other than the residential builder, its workers, or sub-trades.
  • Any damage caused by insects or rodents can also be excluded
  • Failure by the homeowner to prevent damage or minimize the damage (failing to take action to prevent a water leak when it’s occurred and simply waiting for the builder or new home warranty to take action for example)
  • Acts of nature such as an earthquake
  • Damage or defect that’s due to the homeowner’s failure to carry out proper maintenance on the home.

When does coverage start for New Home Warranty?

The warranty policy start date depends on the type of home that is being constructed or was contracted for. In order to understand when your policy starts you need to understand the difference between a custom build home and a spec-built home.

A custom build home is one in which a homeowner hires a licensed residential builder to construct a fee simple single-family home for which they intend to move into the home after it’s been completed.

A spec build is one that is built with the intent of selling to the general public. A spec build for example is what most large townhouse projects are as they are built by a developer with the intent of selling it to a prospective buyer after its completion. It’s also possible for someone to build a spec single-family home, in which case, the individual owning the land would have to ensure they are licensed a developer to avoid any issues with BC Financial Services Authority when trying to sell the home.

For a custom build home, the new home warranty coverage will start at the earliest of

  • The date of actual occupancy of the new home,
  • When an occupancy permit or similar right to occupy has been provided by the local jurisdiction having such authority to do so, and
  • The date the new home was completed and ready for occupancy

For a custom build, the homeowner owns the land already and hires a licensed builder to construct the project. As such, there are three possible commencement dates that the policy can start. If the homeowner moves into the home when the home is perhaps 95% complete, the policy can commence at that point. Therefore, to maximize your home’s coverage you want to avoid moving in until the home is complete and ready. While as a builder, you want to start the policy once immediately upon completing your work or should the homeowners move into the home.

If a single-family home is being constructed by a builder where the land is not owned by the homeowner but rather owned by the builder the commence will be the earlier of;

  • The actual date the home is occupied, and
  • The transfer of the legal title of the new home to the new owner

When buying a single-family home in which you do not own the land, it’s best to purchase the home once everything is complete as then your policy will commence upon the title transfer. If you decide to purchase the home at 95% complete and transfer title, the policy will commence based on that transfer date even if some items may still need to be completed. This policy start date will also apply if the homeowner owned the land and hires a builder to construct a home and then decides to sell it to the public. The homeowner will have to register as a developer and the policy start date will be the earlier of the date the home is occupied or the transfer of title.

For spec build, which will mostly deal with strata homes. The start date of the new home warranty policy will be;

  • The date the unit was actually occupied, and
  • The legal transfer of title from the strata to the new owner

Strata common property also has a start date for their policy coverage. The policy start date will be the date the first strata unit was occupied.

If a New Home was Rented, when is the start date for the New Home Warranty Coverage?

If a builder builds a new home in which the land is also owned by him or not the homeowner that’s going to be purchasing the place and they had someone renting the home after completion, the warranty coverage will commence the date when they first had the place rented.

As such, the new homeowner may not get the full benefit of the coverage as it’s possible some of the coverage periods might have lapsed already. If the project is a multi-family building the start date will be the date the first tenant moved in. The builder or individual selling such a project will have to disclose to a buyer the warranty start date to avoid a buyer not knowing this before agreeing to buy the home.

This tactic is sometimes utilized by some builders to avoid having to provide full warranty coverage for the first two years of the policy. As a purchaser, it might be worthwhile to get some additional contractual guarantee or have the builder resolve any issues you see as concerns before closing on the deal. Do make note that, new home warranty doesn’t cover contractual issues.

How Much Money Will New Home Warranty Cover?

Each new home warranty attached to a home carries a policy dollar amount.

For detached fee-simple single-family homes it;

  • The lesser of $200,000 or the purchase price of the home
    • The maximum amount of claim coverage you will be able to claim is $200,000

If you purchased a strata property the policy coverage limit will be;

  • The lesser of $100,000 or the purchase price

For strata common property coverage, the maximum limit available is;

  • The lesser of $100,000 times the number of units or $2.5 million per building

Are there any Exceptions to not getting New Home Warranty?

A home is not required to get new home warranty if it obtains a rental exemption or is approved to be built under the owner-built program.

If you are constructing any of the following types of homes or projects, the owner of the project may apply to BC Housing for a rental exception if they wish:

  • Three or more dwelling units built for rental purposes and owned under a single legal title
  • Multi-Unit Buildings that are strata titled, but held under single ownership and constructed for rental purposes
  • Multi-unit buildings owned under a single title and constructed for rental purposes

The rental exception is not provided for a single home being constructed. Therefore, it’s unlikely you will see a single-family detached home without a warranty if it meets the program’s requirements. A rental exception is often utilized to save on insurance costs for large projects. However, some builders may still rather have new home warranty insurance in place even if the project is going to be rental to provide them greater marketability and the option to sell in the future before the 10-year period.

When a rental exemption is applied to a project, the homes cannot be sold for 10 years to the general public. BC Housing places a restrictive covenant on title to further ensure anyone buying such a property is aware. The 10 years is placed to match with the new home warranty coverage period. After 10 years, the owner of the project may sell it, as, by this point, even if a new home warranty was in place, it would have expired as well.

The second way in which new home warranty coverage isn’t required is when a home is constructed by an owner builder and authorized by BC Housing. The owner-builder exemption is meant to allow homeowners to build a home for their personal use without the need to obtain a third-party warranty or needing to be a licensed builder while allowing them to be their own project manager.

An owner builder is still responsible for defects of the home for up to 10 years if they were to sell.

Similar to the rental exception, most owner-builder often obtain warranty insurance due to lender requiring it or to be able to sell the home. Most people are hesitant to buy a new home that lacks new home warranty coverage.

Can a Builder Cancel my New Home Warranty Coverage?

It’s possible for a builder to cancel warranty coverage but only under certain circumstances. If a home has reached a stage of mostly completion, the warranty coverage cannot be withdrawn. Rather, the builder will have to offer minimum coverage that includes 5 and 10-year coverage while being able to exclude any other item they are not part of moving forward.

A builder may withdraw warranty coverage without any issue if the project hasn’t started but warranty acceptance has been placed on the project.

If a homeowner or builder wishes to part way with each other, it’s best to do so before framing or at framing. At this stage of the build, everything can be visually inspected by a new builder who may want to take over the job along with their warranty provider and their insurer.  It’s in the best interest of both the homeowner and builder to avoid a break-up late in the building stage as removing the warranty may not be possible.

If a build’s cladding is in place, it might be difficult to cancel the warranty on the home. The reason being is that BC Housing requires a home that’s partially complete or more complete to be provided certain minimum coverages like the 5 and 10-year coverage. Therefore, if the project is at cladding the builder will likely not be able to cancel the warranty but also will not be required to provide you with a full warranty.

They will likely provide you with a warranty policy with an exclusion, which will likely be the 2-year coverage as this will likely not be completed by the builder.

The earlier the parties part way the greater the success of a clean and easy separation, which enables someone else to be able to take over the construction.

Who is Responsible for Managing the Program?

New Home Warranty is managed by BC Housing licensing and consumer branch. Their responsibility includes;

  • Licensing of residential buildings, building envelope renovators, and owner builder authorization
  • Ensuring all new homes built in British Columbia that meet the program requirements are registered under New Home Warranty Insurance
  • Overseeing and monitoring warranty providers
  • Promoting and educating residential builders and consumers
  • Investing and assigning penalties to individuals or companies who violate the program’s requirement

How to Purchase New Home Warranty?

You can purchase a new home warranty in one of two ways. The first is through a licensed residential home builder that you’ve hired to build your home or you’ve purchased a newly built home from. The warranty isn’t your own policy but rather a policy that stays with the home and provides the home with certain coverages.

As such, you do not purchase a policy from the builder per se but rather when you buy a home or have a home built by a licensed residential builder, they have to obtain new home warranty coverage for that home. The cost of obtaining a warranty is then priced into the cost of building the home you wish.

The second way you can purchase a warranty is by buying it directly from the warranty provider. Under the owner builder program, if a person qualifies for the program, they are not required to purchase a third-party warranty. However, owner-builders often end up needing a warranty as most lenders and banks will not finance a new construction home unless they can obtain a third-party warranty.

The warranty providers will consider an owner-builder application but the cost to obtain this type of warranty is usually more expensive than if you had worked with a residential builder already with an insurance provider. An owner-built construction tends to be riskier as it’s possible the individual may not be knowledgeable enough which could lead to greater claims if they were to sell the home while still under warranty coverage.

How Much Does New Home Warranty Cost in BC?

The price paid by a builder or an owner builder will depend on their construction background, company financials, and the number of claims they have experienced. In general, a builder with strong construction background and history along with a profitable business that responds to its claim in a timely manner is likely to provide a lower warranty rate than someone who is the opposite.

To obtain a warranty, the prospective builder has to first obtain warranty coverage before being able to be licensed by BC Housing. A warranty application will entail the builder’s building experience, assessment of the company and its financial viability and personal financial review of all owners of the company. Typically, the individuals who own the company will have to demonstrate they have met a certain financial position.

The rate charged by the warranty provided varies and there isn’t a unified rate charged as each builder’s application might warrant a different price to risk. But generally, standard single-family homes tend to be cheaper than high-end custom homes. Multi-family homes tend to see a lower per unit cost due to having more units.

If you wish to know the cost of the warranty, I would simply ask your builder to provide confirmation of the warranty cost. They are not obligated to provide you with this information but some might in an effort to be transparent. Some builders may also include additional warranty costs into their warranty fee charge above the amount they are charged by their warranty provider.

What Insurance Company Provides New Home Warranty Coverage?

There are four warranty providers that provide warranty in British Columbia; National Home Warranty Group Inc., Pacific, Travelers, and WBI Home Warranty Ltd. National Home Warrant and Pacific are both owned by Hub International.

The company mentioned above operates as a brokerage and work with an insurer who will bind the warranty policy for them assuming it meets the insurer’s guidelines. National Home Warranty’s insurer is Aviva Insurance Company of Canada. Pacific’s warranty insurer is Echelon General Insurance Company and Trisura Guarantee Insurance Company. Travellers is wholly owned by its parent company Travelers Insurance Company of Canada, while WBI Home Warranty Ltd.’s insurer is Intact Insurance Company.

While the warranty companies operate as a brokerage, they are limited in the number of insurers they can actually place their policy with. For example, National Home Warranty will place its insurance with Aviva and can’t shop the same application to Trisura. Therefore, while they are brokerages they don’t operate in the true meaning of being a broker as they can’t shop their deal with all available insurer and place it with the best option for their respective client.

Since each warranty provider operates as a brokerage it’s not uncommon for them to have a change in their insurer. Builders will obtain warranty acceptance from the warranty brokerages and the brokerages will shop their builder’s warranty application to their respective insurers for coverage.

Can you purchase New Home Warranty if you are not a builder?

A new home warranty can be purchased directly with a warranty provider by a homeowner. However, the warranty providers are not under any obligation to offer a warranty.

In British Columbia, a person can obtain an owner-builder license if they wish to build a new home without registering as a builder or having to work with a builder. When a person obtains an owner builder exception, they are not required to obtain a third-party warranty.

While most homeowners take this route to save money. Most of these projects end up requiring a third-party warranty as most lenders will not finance new home construction without third-party warranty coverage or buyers will not purchase the home without a third-party warranty.

The purchase of this policy will require full underwriting on the project and the cost are higher compared to the rate a builder will be charged. The homeowner may also be required to provide a personal indemnity on the project as well. If you believe you need a warranty under the owner build, before applying, I would submit your project to the warranty provider for initial acceptance and determine your cost of insurance.

How to file a New Home Warranty claim?

Regardless of the type of home built or development. The process for filling a claim is pretty much the same across the board.

Step 1: Contact your developer or builder

Step 2: File a claim with your warranty provider

It’s important that you file a claim with your warranty provider in addition to contacting your builder. The warranty coverage is time sensitive, therefore, if you have a claim item that is only covered within the first two years but you end up waiting months to hear back from your builder and fail to file a claim with your warranty provider, you will be at the mercy of the builder doing the right thing and won’t have any legal recourse as the claim wasn’t filed before the coverage expiration period.

Large multi-family builders usually have a dedicated department within their in-house department that deals with just warranty issues. As such, they likely will have an online process in which all homeowners file their new home warranty claims directly with them. I find larger builders who have a reputation to maintain tend to address all their claim defects in a timely manner.

Smaller or family-run builder companies tend to not have the resources and sometimes your email to them can get missed. Therefore, to protect yourself, ensure you file a claim with the warranty provider in addition to filing a claim with your builder. Keep in mind the 1-year and 2-year mark of your policy as this is where the bulk of your coverage is provided. Below you will find link for each of the warranty providers for where you can submit your claim. Be sure to have your policy details in hand as you might need to enter that information.

You can file a new home warranty claim with National Home Warranty here.

You can file a new home warranty claim with Pacific Warranty here.

You can file a new home warranty claim with Travellers here.

You can file a new home warranty claim with WBI here

Do you need New Home Warranty for Renovation Projects?

If you are completing a general renovation project, you do not need to get a new home warranty policy. However, if your project meets the requirement of being considered a new home build, you will have to obtain a new home warranty coverage for the project.

BC Housing is likely to deem a renovation project requiring a new home warranty if;

  • More than 75% of the structure above its foundation is removed and/ or replaced; and
  • A new foundation is laid and the total amount of new structural components, including the foundation, make up 50% of the total finished structure

If the project meets these criteria then it’s likely you will need to obtain new home warranty coverage. It’s best to speak with your local municipality as they likely will deem the project to need a warranty or not. If they are unsure or you believe it does meet the requirement, then follow up with BC Housing to reconfirm.

How to Confirm if a Builder is a licensed New Home Warranty Builder?

You can confirm if a builder is a licensed residential builder in BC by checking the public register through BC Housing here. Simply type in the builder’s information and it will provide you detail regarding if they are active or not.

To find out if your builder has an active warranty policy, you can ask the builder to provide you with a letter from their warranty provider confirming they have active warranty acceptance with them and when it’s up for renewal.

If you are considering buying an existing property and want to ensure it has a warranty, you can search the BC Housing new home register here. Simply enter the home’s details and it will provide you with detail of the warranty provider along with the builder.

Builder’s warranty coverage and BC Housing license are renewed yearly. Therefore, if you’re project is going to take more than a year, ensure to get an updated letter from the builder’s warranty provider as well as re-check the BC Housing registry to ensure they are still an active licensed builder.

What’s the Future of New Home Warranty?

New Home Warranty has been a good program, in general, to increase the overall quality of buildings while implementing a standardized process for builders to obtain their licenses. But like any government program, it hasn’t kept up with the changes occurring today.

The program today creates a lot of confusion and its vagueness is resulting in homeowners, builders, and warranty providers an increasing number of defects and claims.

For example, one of the challenges that come up often with this program is homeowner involvement. Many people building their dream homes increasingly want to be involved in the building based on popular shows on HGTV. This creates a problem for builders who want to keep homeowners out of the project but doing so might mean they lose the business. While the Act advises that homeowner involvement can result in those items being excluded, the reality is when BC Housing does its ruling it tends to side with the consumer, even when there’s been homeowner involvement.

This creates a lot of frustration for both parties as while items can be excluded the implantation and enforcement of these rules are often just talking points.

Another issue that comes up on the consumer side is the business of licensed residential builders selling their licenses to other builders who are not licensed. For example, you might hire X company but the person you spoke to is actually from Y company (unlicensed) and has made a handshake agreement that he can use X company (licensed) warranty license when trying to secure a residential build client. It’s a lot of risk on the X company side as ultimately if something goes wrong it will be their company’s responsibility.

However, if X feels confident that Y can deliver a reasonable product then he can make a quick sum of money with little to no work, assuming there’s no issue.

This is a well-known problem within the industry but again there’s been little movement during my time and I’m sure there’s still been little to no movement. BC Housing has made several updates to stop this practice but the penalties faced when caught are not of any real consequences.

The Act needs to be updated because how people build along with the involvement homeowners have in the construction of their homes has changed dramatically. For this program to continue to be effective it needs to be updated to make the responsibility and exclusion crystal clear for everyone. Currently, it’s crystal clear on paper but the actual application of this act isn’t beyond muddy.

As home prices continue to increase, homeowners are increasing concern about having a poorly built house, which has led to an increasing number of claims filed. This puts pressure on both residential builders and the warranty provider as someone has to pay the cost.

While most claims are resolved the reality is as the number of claims increases the time it takes to resolve those claims also come at a cost. If these costs continue to increase to levels that eat away at the business of the insurance provider, they might opt to exit the space entirely or premiums charged to builders might dramatically increase from what they are currently paying.

To make matter worse, BCFSA recently completed a report in which they wished to have the warranty provider treat their warranty claim as a contract of first resort rather than a surety contract. While sounding great to homeowners, this actually will dramatically impact the cost of insurance premiums over time.

As stated, a new home warranty operates like a surety contract. That means if there’s a defect the insurance company expects the builder to go back and resolved the issue. If BCFSA treats a new home warranty coverage as a contract of first resort, it means they wish to have the insurance company address the issue first rather than reaching back out to the builder and advising them of a defect claim.

If insurers are legally expected to be the first responder then the manner in which they price their warranty claim will be different as now they legally have to respond first, which means the cost is likely to increase for everyone including homeowners.

During my time as a warranty underwriter, I found the current Homeowner Protection Act is outdated and the delay and lack of timely addressing of claims is a result of antiquated legislation that needs to be updated for how we build homes today.

Time will tell how they will address it but at least by reading this blog you should have a better idea of the program and be able to better protect yourself.

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  1. I am a townhouse owner in a complex located in Richmond, BC. The developer took over 5 years to build the complex with numerous deficiencies in the units and the building. We have been in the unit for 2 years, we provided the New Warranty insurance company and the developer with our deficiencies within the first 5 months. We have made appointments with the builder to do the repairs in unit, the appointments were not keep. When we called the Aviva insurance to follow up, we were given excuses why the builders did not complete the work. We have been promised by Aviva that would be done by third party, this has not materialized yet (2 years). I would like to know who to contact to have the work done in my unit and the rest of the building. Please call for any additional information at 604-839-4380.

    1. Hello, this sounds like a difficult situation you’re in. But the positive is that you’ve got a claim in the insurer (Aviva). Your best bet is to continue to work with them if the builder is no longer involved or active. Assuming your claim was approved, then the issue will eventually get resolved. If you wish to contact the regulator regarding your issue, it would be BC Housing and here’s the link for them where you can find their contact detail All the best and hopefully you get a resolution sooner than later.