When purchasing a new home, you get a warranty either from the builder or from a third party insurer representing them. This warranty covers the workmanship of various aspects of the home for a period of up to 10 years. Of particular importance to a homeowner is protection against major structural defects in a home as they tend to be the most critical and expensive ones to fix.
A home builder’s warranty protects a home for up to 10 years for major structural damage that typically appears 4 – 7 years after the home is built. It may be offered by the builder or by a third party insurer and tends to cover major structural components of the house from the foundation up to the roof structure.
By comparison, a new home is normally warrantied for 1 year for workmanship on paint, drywall, doors, trim and things of that nature and 2 years for HVAC, plumbing and electrical systems.
In all cases, these are warranties that are included with a new home purchase and are typically included in the price.
What is covered in a home builder’s warranty?
A typical home builder’s warranty will last for 7 – 10 years and will cover major structural parts of the home including load bearing aspects of the house including the foundation, walls, floors and roof among other areas. It is offered by the builder themselves or from a third party provider that you would deal with directly in the case of a claim.
Specific areas that a home builder’s warranty usually includes are:
Structural coverage
- Roof framing systems
- Load-bearing walls and partitions
- Footings and foundation systems
- Columns
- Floor framing systems
- Beams, girders, lintels
- Masonry arches
Other coverage
- Carpentry work
- Concrete foundations and floors
- Doors and windows
- Dry basement
- Electrical
- Garage doors
- Glass
- Heating and cooling
- Insulation
- Landscaping
- Plumbing
- Roofing
- Septic system
- Shingles
- Thermal and moisture cover
- Waterproofing
Source: American Home Shield
Each specific warranty may have different inclusions and exclusions as well as different lengths of warranty so it’s important to confirm the details.
Important to note is that while some home builder warranties begin on the day the home closes, other companies may only begin the warranty up to 3 years after you’ve taken possession before a claim can be made. This would mean that you’d have to cover the cost of a claim prior to the coverage actually kicking in.
What is excluded in a home builder’s warranty?
- Household appliances usually carry their own manufacturer’s warranty and aren’t included.
- Expected cracks, shrinkage and expansion and other cosmetic changes that may look bad but don’t affect the structural integrity of the home.
- Weather-related damage such as hail or storms which is covered by homeowner’s insurance.
- Damage from pests like insects or termites.
- Dampness or mold due to owner neglect and failure to maintain a proper level of humidity.
- Damage caused by the homeowner or a third party contractor ie. you install a satellite dish on your roof and it causes a leak.
- Other things such as a pool or spa and related equipment.
Home builder’s warranty vs home warranty differences
While a home builder’s warranty is included upon purchase of a new house, a home warranty is one that you the home owner can buy yourself to protect you against damage and repairs to aspects inside the house not related to structural items. It’s voluntary coverage that you can expect to pay around $29 – $60 per month for to cover your appliances as well as many other things depending on the coverage you choose such as heating, AC, electrical and even a pool or spa if you have one.
With a home warranty like this, you typically pay a service fee of between $60 and $125 every time you require a service call and a qualified technician comes to your home to address and fix the problem. So if your dishwasher or fridge breaks, the tech would visit your home and fix the problem onsite usually within 48 – 72 hours depending on the issue and their availability.
As with other insurance policies, you may also have a deductible that you are required to pay and there may additionally be a maximum payout per claim. If your fridge dies and the maximum payout is $1,500 but it’s worth $2,000 new, you may not receive the same brand or model of fridge as a replacement unless you’re willing to cover the difference yourself.
The important thing to know about a home warranty is that it covers wear and tear, repair and replacement of certain items within the house that would not be typically covered by your home builder’s warranty which focuses on larger critical components that make your house safe and livable.
The other difference is while a home builder’s warranty usually lasts 10 years at the most and then expires, a home warranty can be purchased yearly and renewed as long as you like.
What constitutes a major structural defect?
Insurer 2-10 reports that the average structural claim costs $42,500. Their data also suggests that most structural claims are made between 4 and 7 years after the home was built. A major structural defect is one that makes the home unsafe and thus unlivable due to to the failure of a structural load bearing element. These are key elements of a good home builder’s warranty.
Ask yourself how you’d feel about covering a $42,500 charge out of your own pocket if you had to. The 2-10 website gives examples about even more expensive work that in some cases easily exceeds $100,000. As mentioned above some policies may not cover the damage during the first three years of owning the home.
Examples of major structural defects includes:
- Substantial defects in the home foundation, footings, floors, frame or roof.
- Major defects in certain aspects of the structural components of the home such as dangerous wiring, flooding in the basement or failure in the sewage system leading the home to be unsafe.
- Cracked foundation walls that meet minimum requirements to be considered as such ie. stair step cracks, cracks 1/8″ or greater, vertical cracks wide at the top or bottom, large cracks on foundation. Your local or state government may specify what this constitutes.
- Distorted floor joists that have negatively impacted its load bearing abilities.
How to make the best use of your home builder’s warranty
- Take advantage of every inspection you have access to before you take possession of your new home. That way you can look for any potential problems yourself.
- Try to negotiate with your builder for better warranty terms: Ask for more inclusions, a longer warranty. The worst they can say is no.
- Hire a home inspector if you feel it is warranted to look for problem areas that a layman might not see.
- Once you’ve taken possession of the home, document problems that you notice, take pictures and submit them as soon as possible for review to the builder or insurer for consideration. Don’t miss deadlines.
- Depending on where you live, you may have a government run organization that manages the relationship between your builder and you if there are disputes. Often this is the state consumer affairs department.
- You can also contact the Federal Trade Commission (FTC
) for help. - If your homeowner warranty insurer goes out of business you can contact Home Owners Warranty Corporation (HOW) to receive advice and continued coverage.