Ontario government proposes further analysis of home insurance warranty regulations recommendations

Published: October 19, 2017

Updated: July 24, 2018

Author: Luke Jones

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The Government of Ontario wants to the administrator of its new home warranty program to be separate from the regulator of the also new home builders and vendors. Before that, the Liberals plan to study recommendations that suggest a multi-provider insurance system would be best for new home warranties.

Under the Ontario New Home Warranties Plan Act is set up with Tarion Warranty Corp as the administer of the legislation. The corporation is in place to protect customers if a construction company fails to honour warranty obligations.

Bill 166 proposes that the province “provide for two separate administrative authorities,” Government and Consumer Services Minister Tracy MacCharles confirmed Tuesday in the legislature during debate which tackled the bill’s second reading.

“One administrative authority would regulate new home builders and vendors, and the other would administer the new home warranty program,” MacCharles added. “We believe that situating the regulatory and warranty-provider functions in two separate administrative authorities would allow each to better focus on delivering its respective mandates.”

The bill will still call on some recommendations from a Review of the Ontario New Home Warranties Plan Act and the Tarion Warranty Corporation, written by J. Douglas Cunningham, former associate chief justice of the Ontario Superior Court.

“Tarion is providing an insurance-type product to homeowners but neither Tarion nor the warranty protection are subject to the oversight that would ordinarily apply to an insurance company delivering a similar insurance product,” Cunningham wrote in the review.

Bill 166 does not propose to make new home warranty coverage an “insurance product,” a spokesperson for the Ontario Government and Consumer Services ministry told Canadian Underwriter Wednesday.

But Cunningham’s recommendations “dealing with multi-provider insurance-based warranty delivery require further analysis,” the provincial government spokesperson said in an email to Canadian Underwriter. “The ministry is committed to undertaking further study on the feasibility and impact of implementing these recommendations.”