New Home Warranty in BC: How 2-5-10 Coverage Works

Buying a brand-new home, or one that is only a few years old? Most new homes in BC come with third-party home warranty insurance, often called 2-5-10 coverage. Here is what it covers, when it starts, how to make a claim, and what to check when you buy a home that is less than 10 years old.

The short version

Who has to provide it

Under BC's Homeowner Protection Act, residential builders must be licensed by BC Housing, and a new home must be registered for home warranty insurance before construction starts. A new home can't be sold during construction, or within 10 years of occupancy, unless it is covered or exempt. Only insurers approved by the BC Financial Services Authority can provide the warranty, so look for the 2-5-10 logo. The main exemptions are owner-built homes and purpose-built rental buildings.

What 2-5-10 covers

• 12 months: defects in materials and labour in a detached home or strata unit. For common property in a multi-unit strata building, it is 15 months.
• 2 years: defects in materials and labour in the electrical, plumbing, heating, ventilation and air conditioning systems; defects in exterior cladding, caulking, windows and doors that could lead to detachment or material damage; and defects that make the home unfit to live in.
• 5 years: defects in the building envelope, including unintended water penetration that could cause damage.
• 10 years: structural defects, in the load-bearing parts of the home.

These are minimums, and some policies offer more. The coverage limit for a detached home is at least the first buyer's purchase price or $200,000, whichever is less, and for a strata unit, the purchase price or $100,000. For common property, the minimum is $100,000 per unit or $2.5 million per building, whichever is less. A policy can't make you pay a deductible to repair a covered defect, and if repairs make the home unlivable, it has to help with the cost of staying somewhere else.

When coverage starts

• A custom detached home: when you move in or the first occupancy permit is issued, whichever comes first.
• A new detached home or strata unit you buy: when it is first occupied or title is transferred, whichever comes first.
• Common property: when the first unit in the building is occupied or sold.

If the home is sold, the rest of the coverage passes to the new owner automatically. As BC Housing puts it, coverage stays with the home, not the owner.

What isn't covered

The warranty doesn't cover landscaping, site grading and surface drainage, roads, curbs and lanes, or detached structures that aren't part of the home. Driveways are covered, and so are parking structures and amenity facilities in multi-unit buildings. It also excludes normal wear and tear, work or materials you supplied yourself, damage caused by others or by natural events, and damage you didn't take reasonable steps to limit. Poor maintenance can limit your coverage, so follow the maintenance manual your builder gives you and keep records.

How to make a claim

• Write to both. Give written notice, in reasonable detail, to both the warranty provider and the builder, as soon as possible and before the coverage expires.
• Repairs the builder offers without that notice don't count as a claim, so always notify the provider too.
• Check before fixing it yourself, because your own repairs may limit the claim.
• In a strata, owners report defects in their own unit, and the strata corporation reports defects in common property.

If a claim is denied, the provider must explain why in writing. You can ask for mediation, and BC Housing points owners to the provider's complaint process and the General Insurance OmbudService. BC Housing itself can't decide claims.

Owner-built homes

An owner builder builds a home for their own use under an Owner Builder Authorization from BC Housing, without a licensed builder or third-party warranty. They must live in the home for at least a year before they can sell or rent it, and they are personally responsible for construction defects for 10 years.

If an owner-built home is sold within 10 years of occupancy, the buyer must get an Owner Builder Disclosure Notice before signing a contract. It shows when the 10 years started and whether a voluntary warranty policy is in place. If there is no policy, the owner builder stays responsible to later buyers for defects under the same 2-5-10 time frames, but with no insurer behind them, a lawsuit may be the only remedy. Be extra thorough with your inspection.

Buying a home under 10 years old

• Look it up. Search the address on BC Housing's New Homes Registry, which shows the builder and warranty provider for homes registered since November 19, 2007. For older registrations, call BC Housing at 1-800-407-7757.
• Ask for the documents. Request the warranty policy and the expiry dates in writing, and ask the seller to get the claims history from the warranty provider, which costs no more than $25.
• Remember there are two policies in a strata, one for your unit and one for the common property.
• Ask about past repairs. If the building had envelope repairs, ask whether they have their own warranty and when it ends.
• Read the depreciation report. Since July 1, 2024, stratas with five or more lots need one every five years, and the most recent report, if there is one, comes with the Form B. A strata created since then has two years from its first annual general meeting to get its first report, so a brand-new building may not have one yet.

A warranty is not a substitute for an inspection. I explain what an inspector checks in Home Inspections in BC, and the strata paperwork in The Strata Documents to Read First.

Questions buyers often ask me

What does 2-5-10 mean?

The minimum coverage under BC's home warranty: 2 years for defects in materials and labour (the first 12 months for most items), 5 years for the building envelope, and 10 years for the structure.

Does the home warranty transfer to a new owner?

Yes. Any remaining coverage passes to the new owner automatically when the home is sold.

How do I make a home warranty claim in BC?

Give written notice, in reasonable detail, to both the warranty provider and the builder, as soon as you can and before the coverage expires.

Is there a deductible on BC home warranty insurance?

No. A policy can't require you to pay a deductible to repair a covered defect.

Do owner-built homes have a warranty?

Usually not a third-party one. If the home is sold within 10 years of occupancy, the seller must give you an Owner Builder Disclosure Notice, which says whether a voluntary policy is in place.

Buying new? Read Buying a Presale Condo in BC before you sign, and see how freehold and strata ownership differ.

This article is general information, not legal advice. Coverage details depend on the policy. For BC Housing's guide, see home warranty insurance for new homes.