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Whether you own a new home or condo, are considering buying one, or just love to dream about it, the Open Door blog is here to share stories that can help you protect what is likely the biggest investment of your life.

The Open Door blog is published by Tarion, a non-profit corporation that administers Ontario’s New Home Warranty Plan and registers all new home builders in Ontario. Click here to learn more about us.

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What's the difference between a home warranty and home insurance?
June 28, 2022
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A huge tree crashes onto your new home during a storm and causes major damage to your roof. Is this covered under your new home warranty or your homeowners’ insurance?

What if you wake up to a leak through your skylight?  Is this a warranty item or a claim under home insurance?

Both a new home warranty and home insurance provide you with significant protections against emergencies that can cause damage to your home or condo and impair your enjoyment of living in it.  However, each have significant differences – in what they cover, who pays for that coverage, and how they are administered.

Below are some key differences between Ontario’s new home warranty plan and home insurance.

What is covered under the new home warranty in Ontario?

In Ontario, Tarion administers a new home warranty that starts the day you take possession of your new home or get occupancy of your new condominium.

In year one, you’re protected against defects throughout the home, including violations of the Ontario Building Code and unauthorized substitutions of materials written into your agreement. 

Your two-year warranty includes coverage for your home’s major systems – plumbing, electrical, and heating and air systems – as well as water penetration through the basement foundation or other parts of the home .

Your seven-year warranty protects against major structural defects that threaten the structural integrity of a home or affect the use of a significant portion of it. 

What is covered under homeowners’ insurance?

Homeowners’ insurance covers losses and damage to your home and assets inside the home. Your policy usually covers interior damage, exterior damage – sometimes including your yard – and loss of or damage to personal property. 

Specifically, it can cover such perils as fire, certain natural disasters, vandalism, theft, burglar damage, and accidents. Depending on the policy, it can also cover very specific items of value, including expensive jewelry, musical instruments and art.

Who pays for warranty coverage?

In Ontario, the new home warranty is provided and paid for by your builder, but your builder may pass along this expense to you. The one-time fee for seven years of coverage ranges from $375 to $1900, depending on the price of the home. 

Who pays for home insurance?

The homeowner is responsible for purchasing homeowners’ insurance from a private insurer. The average home insurance cost in Ontario is approximately $1,250 perhands hovered over laptop year. It’s important to note that in Canada, home insurance is often required by banks and other mortgage lenders before you can get approval for a mortgage. 

How are warranty claims paid under the new home warranty?

Your builder is responsible for resolving claims for any items covered by the warranty. However, if your builder fails to resolve the issue within the applicable repair period, you can contact Tarion for assistance in getting the repairs done.  

How are claims paid through home insurance?

When you experience an emergency covered under your home insurance, you should call your broker or insurance company right away to make a claim. They may send an adjuster to review the damage or loss, and then will proceed to process your claim. Once it is processed, you will receive compensation to cover the cost of repairs or replacement.  

So, that roof damage from the tree? That’s covered under homeowners’ insurance. The leak through your skylight? That’s covered under your two-year warranty for water penetration. It’s good to know that Ontario’s new home warranty and your homeowners’ insurance policy work hand-in-hand to provide you with solid protection of your investment.


The goal of this blog is to provide you with general information about the warranty process by sharing real experiences from new homeowners. The blog should not be relied upon as legal advice. For privacy reasons, we will not address or resolve current cases in a public forum, so any comments or questions that are posted on this site that describe individual cases cannot be discussed. If you have a question about your warranty or Tarion generally, we would be pleased to discuss your issue, in the context of your particular circumstances and in confidence. We exercise reasonable care to avoid offensive, illegal or defamatory content from being posted, as well as comments that are intended solely for self-promotion or considered to be spam.

 

  

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