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April 1, 2024

Having a new home built just for you and your family is incredibly exciting: you get to pick out the finishing touches and you know that your family are the first ones to live there. There are a lot of details however, about your new home that are important to be prepared for, including the warranty that comes with your new home. Many homeowners would believe that a home warranty and insurance are the same thing, but they are quite different. Here’s what you need to know.  

What is a home warranty? 

In Ontario, it’s the law that all new built homes come with a warranty by the builder of the home. The coverage in this warranty protects you financially before you take possession of the new house, and from construction defects after you take possession of the home for up to seven years from the time the agreement of purchase was signed.  

The first year of your contract you are covered for defects around your house and even violations of the Ontario Building Code. The major systems of your home – electrical, plumbing, etc. – will be covered for two years after the signed agreement. Finally, you will be covered for seven years against major defects that impact the structural integrity of your home.  

Who pays for a warranty and how much does it cost? 

In Ontario, a home warranty can cost anywhere between $375 and $1,900 and it is determined by the price of your home. Legally the builder has to pay the warranty company for the warranty itself, but your builder may end up passing along the cost to the buyer in the purchase price.  

How is a warranty different from insurance? 

Home insurance is responsible for covering against loss and damage to your home, including your belongings that are inside your home. The policy will usually cover interior and exterior damage including fire, flood, (most) natural disasters, theft, vandalism, and other accidents. It can also include protection against theft of personal items like jewelry, art and other items of value.  

The warranty protects against building violations, major system issues and problems with structural integrity instead of incidents that take place against the home from an external source.  

Do you need both?  

Yes you do need to have both insurance and a home warranty on your new built home. 

If something goes wrong with the home itself, then you will want to make sure you have the home warranty so the builder will make the major repairs. You don’t want to be paying out of pocket for replacing your electrical panel when the builder made an error in the construction of your home.  

Further, you can’t predict natural disasters, fires or floods so it’s just as important to have the right type of home insurance, so you and your family is protected as best as possible.  

Contact ICD Insurance today 

If you are building a new home that comes with a home warranty you will still need to contact your insurance broker to determine the best policy and coverage for you and your new home.  

Talking to an ICD Insurance broker will help ensure you have just the right amount of coverage. Contact us today.