What is a home warranty? Is it different from an insurance policy and a builder’s warranty? And what are the benefits of buying a home warranty for new construction homes?
What is the Difference?
It’s easy to confuse home warranties with home insurance, but the two are very different. Let’s see how.
A home warranty is an optional one-year service contract between a homeowner and a home warranty company. When the year is up, you must renew for it to continue. They can cover defects in the home, its systems, and appliances over normal wear and tear. Home warranties don’t cover damage caused by natural or man-made disasters like a homeowner’s insurance policy does.
Your homeowner’s insurance policy is required coverage when purchasing a home. It covers accidental damage to your property and possessions due to theft, fire, natural disasters, and more. Homeowner’s insurance doesn’t cover issues related to natural wear and tear. If one of your home systems or appliances fails, your insurance policy won’t cover it.
Most builders offer warranty terms for new homes. Ask your builder what their warranty includes. Generally, they may include, but are not limited to, a
- One-year warranty on materials and labor
- Two-year warranty on plumbing, heating, electrical, and HVAC systems
- Ten to Twenty-year warranty on structural elements, including load-bearing walls and foundations.
The builder’s warranty will not include appliances such as garage door openers, refrigerators, dishwashers, ovens, and more. They typically don’t cover code violations, permit fees, defective installations, or a pool or spa.
Benefits of Buying a Home Warranty for New Construction
Problems with a new-build aren’t always readily apparent until you’ve lived there a while. A home warranty is a solution if an unexpected breakdown or repair arises. Some home warranties protect against
- Code violations
- Failures due to undetectable, pre-existing conditions or mismatched systems, and improper installations.
- Repairs or modifications
- Components for home systems and appliances
You never know what could go wrong—even with a new home. Home warranties protect against a variety of problems. And it gives you extra peace of mind.
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