A service contract that covers the cost of repairing or replacing major home systems and appliances (like the furnace, water heater, or electrical system) for a set period after purchase. Home warranties are different from homeowner's insurance, which covers damage from events like fire or storms -- a warranty covers breakdowns from normal wear and tear.
Why It Matters
For buyers of older GTA homes, a home warranty can provide peace of mind against surprise repair bills in the first year of ownership. Sellers sometimes offer one as an incentive, and it can be a smart negotiating tool on both sides of a deal.
Real-World Example
You purchase a 1960s bungalow in Scarborough for $850,000. The furnace is 18 years old and the water heater is nearing the end of its life. As part of your negotiation, you ask the seller to include a one-year home warranty costing roughly $500 to $700. Three months after moving in, the furnace fails. The warranty covers the $4,500 replacement cost minus a small service call fee.
Ontario & GTA Context
Home warranties for resale properties in Ontario are offered by private companies and are not regulated by the province in the same way Tarion covers new builds. Coverage, exclusions, and claim processes vary by provider. Do not confuse a third-party home warranty with Ontario's Tarion Warranty, which only applies to newly built homes registered with Tarion.
How It Works in Practice
Consider requesting a home warranty when buying an older home with aging systems. Sellers can also offer one proactively to make their listing more attractive. Read the fine print carefully -- most warranties have coverage limits, exclusions for pre-existing conditions, and specific claim procedures.
Common Questions
Is a home warranty worth it in Ontario?▾
What does a home warranty not cover?▾
Related Guides
Need Guidance?
Get a second opinion on your real estate situation. No pressure, no obligation.
The RAZZ Report
Market insights and practical advice delivered to your inbox.