Making Sense of 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. Many builders offer home warranties, or provide warranties purchased 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 Your Warranty Cover?

Though the duration and scope of your coverage may differ, most builder warranties have common elements. According to the Federal Trade Commission, “most warranties on new construction cover siding and stucco, doors and trim, and drywall and paint during the first year, while coverage for HVAC, plumbing and electrical systems is generally two years.” Some builders will provide additional coverage for up to ten years for “major structural defects,” such as a roof collapse. Other coverage will vary depending on your builder — Pulte Homes, for example, offers a warranty on certain kinds of water infiltration and internal leaks for five years after the time of closing.

Ilona Bray, a lawyer specializing in real estate, recommends getting an inspection before every warranty expiration date. She notes that, “some defects are hard to detect, so it may be worth paying a professional to point out what the builder needs to fix.”

What a warranty does not cover is often just as important as what it does cover. First American, a provider of home warranties, states that “you may have additional expenses associated with repair or replacement. 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 usually do not cover normal wear and tear, household appliances, small cracks in your brick, cement or tile, or other components already covered under a manufacturer’s warranty.

Interested in purchasing a new home covered by a builder warranty? Start your home shopping journey here.

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. 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 warranty rights were violated, Bray suggests reaching out to a consumer protection agency or an attorney for help.

Though 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.