Are Home Warranties Worthwhile?

Posted by Justin Havre on Monday, August 20th, 2018 at 10:50am.

Why You Need to Review Your Home Warranty Canadian homeowners may give little thought to their home warranty but should know more, especially when buying a new home. There are some differences between a home warranty and home insurance policy, with specific timelines applying to coverage.

Learn more about Canadian home warranties today to ensure your home is covered when anything happens to it.

For informational purposes only. Always consult with a licensed mortgage professional before proceeding with any real estate transaction.

The Fundamentals of Home Warranties

Home warranties are not alike and are known to vary. There are a number of home warranty programs available, such as single New Home Warranty Programs, mono-provincial warranty programs and third-party warranties. Major Canadian lenders, such as the Canada Mortgage and Housing Corporation, Canada Guaranty and Genworth Canada need home builders to be involved in a warranty program when a high-ratio loan is involved.

Who Pays for Home Warranties?

It may not be clear as to who pays for home warranties as the cost is generally included in the purchase price of a home. Homeowners are not making regularly payments to a home warranty company, as they would be to a mortgage loan lender. Nevertheless, they are paying for their home warranty when they buy the home.

Are Home Warranties Beneficial?

Canadian homeowners do get additional protection from some potential construction defects. This coverage generally lasts for a few years. In British Columbia:

The structure is insured for a decade
Materials and specified labour are covered by a home warranty for two years
The building envelope is protected for five years

Compare this with the New Home Buyer Protection Act and warranty coverage for homeowners in Alberta and see that the minimum offered is only one year for labour and materials, with building envelope and major structural components the same as stated above. It is therefore important for homeowners to understand the respective length of time for each of the areas covered. This can impact whether or not a homeowner may file a claim.

The type of housing will also impact home warranty coverage. Different types of homes, such as row homes, semi-detached homes and single-family homes, may have varying coverage from their respective home warranties, with changes to timelines and stipulations. Those looking to buy a home often get a home warranty from a warranty program member, with First National as one mortgage lender offering home warranties.

What Is Involved in the Claims Process?

Those who may need to file a claim should first review their warranty dates. It is not possible to file a claim if the defect is found and the claim process initiated outside of the warranty dates given in the warranty. Before filing, one can contact a builder to discuss an issue and the builder may try to address the issue.

Filing a claim involves contacting the warranty provider who can give more details of their specific process.

Is It Easy to Work with Builder or Warranty Company to Fix an Issue?

Many may have no problems working with a builder or home warranty company to address defects in a home. Others are not as lucky. In some cases, as with a couple in British Columbia, a claim was filed after deficiencies were uncovered. The warranty company had different findings than those specialists hired by the couple and eventually conceded, starting remedial work on the home. Those having issues with their home insurance company may file a complaint with the Financial Institutions Commissions, the agency responsible for regulating insurance providers.

Know Your Home Warranty

Homebuyers need to review their Sagewood home warranty and understand any limitations, should a claim need to be filed for construction defects found in the house. Home warranties are meant to provide useful coverage for homebuyers and to help enforce home building standards.