Home warranties offer a protective shield against the high cost of unexpected breakdowns or failures in the major systems and appliances within your home. They cover a wide range of elements, stretching from the electrical system to HVAC plumbing. Particularly significant for newly constructed homes, these warranties cover the repair or replacement of components due to inadequate workmanship, inferior materials, or structural defects. This type of warranty is an essential buffer against unforeseen expenses in your new home.
Builder Warranties: What They Cover and What They Don’t
Primarily, there are two types of warranties relevant to new homeowners: the builders warranty coverage and the third-party home warranty. Both serve different purposes and cover varying aspects of your newly built home.
Builder warranties, typically covered by the builder, focus on the construction of the home. They target workmanship and materials, ensuring structural elements, HVAC plumbing, and the electrical system of the home are free of construction defects for a set period.
On the other hand, a third-party warranty, often offered by home warranty companies, caters to repairs or replacements of major systems and appliances damaged due to normal wear and tear post-construction.
Why You Need a Home Warranty
While the best construction warranty can give you an initial sense of security, it’s crucial to understand that there are gaps in its coverage. A third-party warranty or a construction home warranty can bridge these gaps.
Third-party warranties go beyond builder warranties, covering elements that builder warranties don’t cover. For instance, they may cover damage caused by poor soil conditions or pest control problems, typically not part of the builder warranties. Home appliances, including your fridge and dishwasher, and the home security system are also covered under the third-party warranty. This coverage brings homeowners peace of mind even after the expiration of the builder’s warranty.
Builder warranties primarily cover the workmanship and materials used in the home’s structure and its major systems. Home warranties protect a wide range of home systems and appliances not covered by builder warranties. Plumbing and electrical systems, home security system, home appliances, and even your HVAC are within the purview of a solid home warranty plan.
Covered defects include the malfunction of systems due to normal wear, saving you from expensive repairs or replacements. Builder warranties only cover construction-related issues. Hence, a home warranty supplements a builder warranty by offering additional protection.
What Home Warranties for New Construction Homes Typically Cover
Home warranties for newly constructed homes offer a wide range of coverage. While the specifics can vary between providers, they typically cover:
Major Systems: This includes the electrical system, plumbing system, and HVAC system.
Home Appliances: Most warranties cover kitchen appliances such as the refrigerator, oven, and dishwasher. Laundry appliances like washers and dryers may also be included.
Home Security Systems: Depending on the plan, some home warranties may cover your home security system.
New Construction Home Warranty vs Homeowners Insurance
While a home warranty and homeowners insurance both provide protection for your home, they cover different areas. New construction home warranty generally covers the quality of the workmanship, materials, and systems (like HVAC, plumbing, and electrical) in the new home. If there are defects or problems within a specified period (usually one to ten years depending on the nature of the issue), the builder is responsible for repair or replacement. This kind of warranty doesn’t cover “acts of God,” like storms or floods, or damages due to the homeowner’s neglect or abuse.
Homeowners insurance, on the other hand, is a policy purchased by the homeowner to cover losses and damages to an individual’s house and assets in the home. Homeowners insurance policies generally cover interior and exterior damage to the home, loss or damage to personal belongings due to theft or other events, liability for injuries or damage caused to other people while on the property, and coverage for living expenses if the home becomes unlivable. However, some events like floods or earthquakes may not be covered and may require additional policies.
Choosing the Right Warranty
Choosing the right home warranty for a new construction home involves careful consideration of several key factors. Here’s a guideline to help you through the process:
Understand Your Needs: What type of coverage do you want? Do you want a warranty that only covers major systems like HVAC, plumbing, and electrical? Or are you looking for comprehensive coverage that includes all appliances, systems, and potentially even structural coverage? Evaluate your home, consider your level of comfort with potential out-of-pocket expenses for repairs or replacements, and choose the type of coverage that suits your needs best.
Builder’s Warranty: Often, a new construction home comes with a builder’s warranty that covers major structural defects for up to 10 years. It’s essential to understand what’s covered under this warranty, so you don’t buy a redundant home warranty. Most builder’s warranties cover workmanship and materials on various components of the house, typically for one or two years.
Research Various Companies: There are many home warranty providers out there, and they all offer different plans at different prices. Look for reputable companies that have been in business for a while, have good customer reviews, and a record of prompt service. Consider their reputation, customer service, coverage options, cost, and service agreements.
Read the Fine Print: The contract should be read thoroughly to understand the coverage, limitations, and exclusions. Look out for limits on the amount the company will pay for repairs or replacements. Some warranties may require routine maintenance or inspections for coverage to remain valid.
Cost-Benefit Analysis: While the most comprehensive plans will give you the greatest peace of mind, they’re also the most expensive. Make sure to balance the cost of the warranty with the potential repair costs and your comfort level with risk.
Customer Service: Check the warranty company’s response times. You will want a company that provides 24/7 customer service and has a quick response time to filed claims.
Ask for Recommendations: Speak with homeowners who have used home warranties for their homes and ask about their experiences. Your real estate agent may also provide recommendations based on their experience with various companies.
When purchasing a newly constructed home, home warranties are an investment worth considering. They offer extensive coverage for a range of potential issues, providing homeowners a safety net against unexpected repair costs.
Remember, a home warranty isn’t the same as homeowners insurance, which covers your home’s structure and belongings in the event of a fire, storm, flood, or other natural disasters. It’s an extra layer of protection that covers repairs and replacements of systems and appliances due to normal wear and tear.