Protecting Your New Home
New home warranty together with homeowner insurance is designed to give you security against risks beyond your control. Although you don't have to worry about managing your risk profile like with home insurance, you must however be very meticulous when making a claim.
What's New Home Warranty
New Home warranty programs provide protection against defects in materials and construction, building code violations and major structural problems. New condos are covered for individual units and common elements.
The warranty provider administers the program. The participating builder you purchased your house from has an obligation to carry out repairs covered by the warranty policy.
Your premium depends on the coverage and the price of the home. It's a one time expense of few hundred dollars. For instance, Tarion Warranty in Ontario charges $690 for a house costing between $350 K and $400 K.
A third party warranty is available across Canada except Yukon, North West Territories and Nunavut. It's mandatory in Ontario, Quebec, British Columbia and Manitoba.
In other provinces a third party warranty is optional. However, members of the Canadian Home Builders’ Association are required to offer it as a condition of membership.
Builders who don't participate in a warranty program usually offer a limited, one year guarantee on workmanship and materials. You'll receive much less protection and your coverage can practically expire when the company goes out of business.
Warranties differ between provinces and providers. Your deposit will be protected, up to a defined limit, as soon as you make it. The rest of your coverage will begin when you sign the certificate of completion and possession, concluding the pre-delivery inspection.
Some programs protect from a delayed closing. Most of them cover materials and workmanship defects between 1 and 2 years , and coverage of particular risks terminates at various times.
External walls and a roof are usually insured for 5 years. The most serious problems, such as structural defects are covered for 10 years.
With a little persistence you may be able to squeeze more coverage from your deal. Many components in your house like doors, windows, HVAC and electrical systems will have manufacture's warranty lasting longer than the home warranty.
So negotiate the matter of these extra warranties with your builder, and have a suitable clause entered in your purchasing agreement to ensure that you get them.
In conclusion, we have to point to you that warranty services aren't immune to bitter disputes between a homeowner and a warranty provider, or a builder.
Ultimately, your entire home buying experience depends more on how carefully you pick the builder and perform a pre-delivery inspection.
Your warranty is like a service contract which covers the cost of removing defects found in the house. If you make a claim, the warranty provider decides what work has to be done.
The warranty doesn't provide a blanket protection. In order to secure your rights you must follow the rules.
You won't be protected for damages resulting from any upgrades made in the house. Changes performed by the homeowner (like knocking a wall or building a deck) aren't covered, and they could invalidate your warranty.
The warranty is contingent on a proper maintanace of the house. You'll receive a manual describing major systems, and a schedule of maintenance jobs. A failure to follow the maintenance guidelines might be another reason for losing the coverage.
Claims are time sensitive. If you don't know what is covered and for how long, you may forfeit your claim. You have to report a problem in writing to both the warranty provider and the builder before the applicable coverage expires.
Mark all critical dates in a calendar, and then make sure you file your claim not later than a week prior to the deadline.