Builder Warranties: What Are They & What Do They Cover?

When you purchase a new home, you want protect it — from the crown molding right on down to the foundation. All builders will offer a home warranty or provide you with the option to purchase a new home warranty from an independent company that assumes responsibility for certain claims. Some homeowners will purchase additional coverage to supplement their builder warranties.

No matter where your coverage comes from, it’s important to understand exactly what you’re getting. After all, the average structural defect can cost $50,000 or more to repair. Read on to save yourself both headache and heartache if you notice an issue with your new home.

What Does a Builder Warranty Cover?

It’s important to note that all new home warranties from builders will differ. These differences are not just in what is covered under the warranty, but also the duration of said coverage. However, the good news is that most builder warranties have a few common elements.

“Builder warranties for newly built homes generally offer limited coverage on workmanship and materials for specific components of the home, like windows, heating, ventilation and air conditioning (HVAC), plumbing, and electrical systems.”

– Federal Trade Commission (May 2021)

Additional Coverage

Some builders will provide additional coverage for up to ten years for “major structural defects,” such as a roof collapse, foundation concerns, or major HVAC issues.

Other coverage will vary depending on your builder. For example, Pulte Homes offers a warranty on certain kinds of water infiltration and internal leaks for five years after the time of closing. This is unique to Pulte and certainly not the norm warranties from builders.

• Homeowner Tip: It is strongly recommended that you get an inspection done on your home a month or so before your warranty expires. Some defects will be difficult to detect. Because of this, it may be worth paying a professional home inspector to come in and point out issues that need to be fixed while they are still covered in your warranty.

What is Not Covered In Your Warranty?

What a warranty does not cover is often just as important as what it does cover. It’s important to remember that there may be additional expenses associated with repair or replacement, and some of these might not be covered under a new home warranty.

For instance, costs to bring out-of-code systems into compliance, structural modifications and modifications to existing equipment, secondary damage, and cosmetic fixes are items that may not be covered.

Builder warranties often do not cover normal wear and tear, household appliances, small cracks in your brick, wall texture, cement or tile, or other components already covered under a manufacturer’s warranty. However, it is not black-and-white. If your new home warranty has not expired then reach out to your builder and you just might be able to get them to fix the issue.

How Can You Make a Claim?

If you notice a defect in your new home, consult your warranty to determine whether the problem is covered. Then, file your claim according to the instructions.

If there are any conditions that could cause additional damage, such as water leaks, you should report that as well. Be sure to document your request in writing, even if the company provides a hotline for filing urgent requests. Take lots of photos. Send any correspondence via certified mail, and request a return receipt (so the builder can’t later claim they did not receive it).

Your builder (or third-party company) will want to investigate your claim and determine the next steps, so do not call a repairman before you get approval. Sometimes, you may be offered cash in lieu of a repair or replacement.

What Do You Do If There Is a Dispute?

Let’s say you notice a problem with your new home, you report it, and the builder repairs the issue.

However, the repair work was not done to your satisfaction. Most new home warranties provide for mediation if there is a dispute, followed by mandatory binding arbitration if mediation is unsuccessful.

If you think your builder warranty rights were violated, it is recommended that you reach out to a consumer protection agency or an attorney for help

Final Thoughts

Though new home warranties can seem confusing and intimidating at first, with a little background research you can make sure that you’re prepared to handle any issues that may come up.

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