An unfortunate fire causes a total loss of an insured home. The insurer immediately swings into action, investigating the cause of the fire, the coverage that applies and the extent of the insured damages. The claim reserve is established and the file progresses well.
Arrangements are then made to remove the remnants of the old home. A new home is constructed using the insurance restoration contractor. This contractor builds a turnkey home for the insured family and soon they move in. Just another happy customer and another closed file. All is well. Or is it?
Was the insurance restoration contractor a registered builder? And was the home enrolled in the new home warranty program? The Ontario New Home Warranties Plan Act defines a builder as a person who undertakes the performance of all the work and supply of all the materials necessary to construct a completed home. By law, every builder of residences in Ontario must be registered by Tarion Warranty Corporation, must enroll the new home and provide statutory warranty.
Warranty Requirements for New Homes
Many insurance restoration contractors are not “registered” builders. Many do not know they must “enroll” the new home before construction. They may not be familiar with the requirements of providing a warranty for the home. As a result, they may face stiff fines or even jail time for conviction.
Are property claims adjusters facilitating this crime? Warranty protection relieves the insurer from providing compensation for improperly constructed homes. It protects both the property claims adjuster and the insured if the builder/ contractor goes out of business after construction of the new home or condo is complete.
Here is what you need to know to protect yourself and your company. Tarion Warranty Corporation is a private corporation established in 1976 to protect the rights of new homebuyers and regulate new homebuilders. Tarion is responsible for administering the Ontario New Home Warranties Plan Act, which outlines the warranty protection that new home and condominium builders must provide by law to their customers.
The homeowner is entitled to warranty coverage for seven years from the date of occupancy of their new home. Tarion’s primary purpose is to make sure builders abide by this legislation. Tarion will step in to protect consumers when builders fail to fulfill their warranty obligations. Over the years, Tarion has paid out over $190 million in claims from its guarantee fund. Financed entirely by builder registration, renewal and home enrolment fees, Tarion receives no government funding and has guaranteed warranty protection for well over 1.45-million new homes in Ontario.
As the regulator of Ontario’s new home building industry, Tarion registers new home builders and vendors, enrolls new homes for warranty coverage, investigates illegal building practices, resolves warranty disputes between builders/vendors and homeowners and promotes high standards of construction among Ontario’s new home builders. Tarion also works with the building industry to help educate new homebuyers about their warranty rights and how to maintain their warranty.
What Property Claims Adjusters Should Do
Ask the restoration contractor about to construct the new home if they are a registered builder with Tarion. Check www.tarion.com/Services/builder_search.aspx by entering the name of the contractor to obtain their registration number. If they are not registered, advise them to register with Tarion before constructing the home, or choose another builder that is registered. To find a registered builder, go to www.tarion.com and search by geographic area under “Licensed Builder Directory.”
Make sure the new home is enrolled before construction begins. Provide the new home address and builder’s name to Tarion using Tarion’s Web site.
Direct your insured to sign up through the homeowner’s portal on Tarion’s Web site so they can communicate their warranty details online with Tarion.
Your insured is entitled the same statutory home warranty available to all new homeowners in Ontario. By following these simple steps, you will be providing your clients with the best protection available and complying with provincial legislation.
The information above refers only to Ontario. However, most other provinces have similar new home warranty programs in place. Please take the time to research the new home warranty protection available in your province.