In
general terms, home warranty insurance only covers defects. Defects are defined
by the Act as meaning any damages that result from design, materials and labour
that are contrary to the Building Code, or damage that requires repair or
replacement due to the negligence of a residential builder or person for whom
the residential builder is responsible at law. For instance, this would include
work performed by trades under the residential builder’s supervision, but would
not cover defects in design, materials or labour supplied by the owners.
Home
warranty insurance is specifically defect insurance and does not deal with
contract related issues, such as cost overruns or other financial disputes,
incomplete work, substitution of materials or colours, delayed occupancy or
deposit refunds. Work that is incomplete due to the negligence of the builder
and causes a Building Code violation that constitutes an unreasonable health or
safety risk may be covered under warranty.
Owners
of new homes should familiarize themselves with the terms and conditions of
their home warranty insurance by reading their policy carefully. The policy
contains information about commencement dates, exclusions, owner maintenance
obligations, standard of coverage and financial limits of the policy.
Not all
work undertaken by the builder is covered by the mandatory warranty coverage.
Some builders may offer after sales customer service programs that go above and
beyond the mandatory warranty coverage. Should the builder undertake repairs as
a customer service on an issue where there is no warranty coverage, the repair
is beyond the scope of the warranty protection and is not covered by the
one-year warranty on repairs and replacements. In general, home warranty
insurance does not cover site grading other than directly around the perimeter
of the home, landscaping, septic systems or municipal services, detached
structures such as garages, garden sheds or other outbuildings (certain
exceptions apply to strata common property).
In
addition, weathering, normal wear and tear, normal shrinkage of materials such
as concrete and wood, material design or labour provided directly by the owner,
damage caused by animals or insects, fire windstorm or other acts of nature are
also not covered under warranty. Generally speaking, manufacturers’
specifications or instructions should be followed when materials are supplied
for or installed in the home and would be used to determine the acceptable
performance/condition for warranty coverage. However, it’s important to note,
that manufacturers’ specifications or instructions are not always available,
may not be relevant to local conditions and building practices, and do not
cover all installation situations. In these cases, normal, local industry
standards would determine the acceptable performance/condition for warranty
coverage.
Damage resulting from work performed by the owner or under the owner’s
direction after occupancy, such as renovations, alterations, deletions or
additions, is not covered under warranty. A complete list of allowable
exclusions can be found in sections 10 and 11 of the Homeowner Protection Act
Regulation.