I have been fortunate in my life to never have had to use a home warranty insurance policy, but I thought to myself that if I had to I would know nothing about it or how to use it. So I asked around to my friends and colleagues, and to my surprise neither did ANY of them. So the next time I had to go to the washroom I decided to take my policy and have a read. It was all very fine and dandy and confusing. As with my usual manner, I decided to do a thorough investigation. Before going to the website of the Homeowner Protection Office (HPO), which is responsible for ensuring that builders follow the rules, I went online and downloaded a pile of info. After sifting thru all of it I learned a few interesting tid bits that I would like to share with you.
Under the Homeowner Protection Act, every new home offered for sale, as of 1999, must be constructed by a Licensed Residential Builder [remember that article I wrote in the Spring Issue – make sure your builder is a member of the Greater Vancouver Home Builders Association!]. Also that builders are responsible for arranging the mandatory New Home Warranty Insurance on the homes they build. After your new home is completed, your builder (or your warranty provider) should give you a home maintenance manual and information describing how the mechanical and other systems work, where to find controls, and a schedule of maintenance work that will prevent damage to the home. Your home warranty insurance coverage is contingent on the proper maintenance of your home being carried out in accordance with this maintenance manual. Your warranty provider is ultimately responsible for repairing any construction defects covered by your policy, but in many cases the original builder will have a contractual obligation with the warranty provider to carry out the repairs. Therefore, always notify both of them in writing for any work that has to be done under your policy … so you should read those pieces of paper carefully and know exactly WHAT IS COVERED.
What is NOT covered you ask? Very good question. Your coverage may be limited if the original owner (not builder) supplied materials or labour, OR if you don’t adequately maintain your home in accordance with the maintenance information provided by your builder or warranty provider, OR if changes, alterations or additions are made to your home, after initial occupancy, by anyone other than the builder, OR if you do not take timely action to prevent or minimize loss or damage to your home, OR if your home is used for non-residential purposes, OR if you don’t follow the specified procedure for reporting claims.
So what if I am buying a home from a previous owner you ask? You’re getting good at this. Because the warranty applies to the home, not the home owner, it remains active if the house or unit is sold within the warranty period. I’m going to give you a few tips I learned … before completing the sale, review the policy documents to find out coverage expiry dates (know your 2-5-10) and ask the seller for a claims history report from the warranty provider. It costs 25 bucks but may save you some headaches, so you may want to make it a condition of sale. Make sure you obtain the policy documents and a maintenance manual for you to follow, and probably a good idea to get any other manuals and warranties for appliances, products or systems.
Here’s another good one… BEFORE YOU MOVE IN to your home, prior to closing, inspect the property together with the builder. This is called a ‘walk-through’, and is usually your first opportunity to fully inspect the home. Get your builder to bring an inspection form, make sure to fill it out completely, noting any incomplete work or damages. Home warranty insurance providers generally rely on this form to determine if they will cover physical damage to materials such as finished flooring, countertops and plumbing fixtures. Probably a good idea to take some pictures too.
It is definitely worthwhile to tell you that there is an instance where a home you are looking at purchasing may not have the usually mandatory homeowner warranty insurance. This instance is where the home was built by the original homeowner (who must live in the house for at least one year). Therefore, it is prudent to inquire as to whether your potential home was built by the original owner. The owner-builder must disclose this fact for up to ten years (the maximum length of the mandatory 2-5-10 warranty). If you’re worried, I’d call the HPO and investigate.
Well, that’s pretty much it in a nutshell. Hopefully you found the brief overview informative. If you follow all of these things you should not have a lot of difficulty with getting repairs done through your policy, but then again … I believe in Murphy’s Law.