Home builder warranties benefit both builders and homeowners by shielding them from the cost of major repairs.
A builder’s warranty will be one of the first items a quality assurance professional will direct you to purchase if you’re a builder.
While builders’ warranties may be quite limited, they can save you and your construction company thousands of dollars in new repairs if issues pop up beyond your control.
Furthermore, builders’ warranties and routine inspections should be an integral part of your QA plan, regardless if you contract QA work to a third-party consultant or retain a QA manager.
This guide will help you understand what a home builders’ warranty on new homes covers and why you should get one to avoid future paying for repairs and protect your reputation.
What is a Home Builders Warranty?
A home builder’s warranty covers the repair of structural components and materials used in the construction of a new home for a specific period.
Unlike a home warranty, home builders’ warranties protect homeowners from manufacturing or material defects found after the construction of a new home. However, these warranties do not cover homeowners from damage that occurs naturally to their homes through normal use.
Builders’ warranties protect builders against financial liability and provide homeowners with extra protection against major repairs.
Home builders’ warranties on new homes differ from a home warranty or homeowners insurance. For example, a home warranty covers everyday appliances and may even cover some structural components, like plumbing or roofs. On the other hand, homeowners insurance doesn’t cover any repairs unless caused by weather or unexpected accidents.
As a comparison, home builders’ insurance is typically a B2B or business-to-business sale, protecting builders and homeowners from paying for major structural repairs after constructing a new home. Home warranties are a B2C or business-to-customer sale, covering basic home appliances from repairs over the life of their use.
To better understand what a home builder’s warranty is, let’s discuss what it covers and does not cover.
What Does a Home Builders Warranty Cover?
Generally, a home builder’s warranty covers everything from roofing and major structural components to basic materials like paint, drywall, and windows.
However, most home builder warranties only cover certain portions of your home for different amounts of time. To better understand what your home builders’ warranty covers, it’s critical to analyze the time frame the builders’ warranty covers each home component.
Materials and Workmanship (1 Year)
This part of the warranty covers any material defects or parts that were improperly installed Some areas of this coverage include:
- Improper window or door installation
- Cracking or splitting wood
- Landscaping materials (e.g., sidewalks, patios, decks)
However, most of these materials are not covered past one year of warranty.
In addition, home builders’ warranties only cover extensive damage. For example, a home builder warranty will not cover small cracks in drywall and brick that are not deemed structurally significant.
Essential Home Parts (2 Years)
This area of the home builder’s warranty covers the home’s guts. This coverage includes HVAC systems, ductwork, plumbing, and electrical work. However, this area does not cover appliances, even if they were included with the new construction build.
Major Structural Defects (Up to 10 Years)
This portion covers anything deemed to be a major structural defect. Major structural defects include damaged roofs, foundations, floors, and load-bearing elements, such as rafters, beams, columns, and masonry work.
However, to better understand what home builder warranty covers, it’s helpful to understand what it doesn’t.
What Doesn’t Home Builders Warranty Cover?
While home builders warranties cover many of the areas listed above, this coverage is often limited to material craftsmanship and installation defects. For that reason, home builders’ warranties don’t cover damage caused by:
- Natural use or degradation
- Additions made to the home
Additionally, home builders’ warranty is strictly limited to building materials and structural components. Home builders’ warranties don’t cover appliances, small cracks or defects, or any component under a service contract.
A service contract covers basic appliances, like a refrigerator or washing machine, under a limited timeline like a warranty.
To put it simply, home builder warranties cover structural components that are weak or improperly installed. These warranties do not cover everyday repairs caused by regular use or abnormal weather.
Pros and Cons of a Home Builder’s Warranty
Covers Major Repairs: Builders’ warranties shield construction companies and builders from having to foot the bill on major structural defects.
Ensure Proper Workmanship: These warranties cover materials and workmanship to ensure that the proper construction of the home is up to grade and follows proper construction safety plans.
Protects Your Reputation: If a home needs a significant structural repair, a builders’ warranty will cover the repair without adding on costs to the homeowner. In turn, your company can avoid any financial liability, possible litigation, and loss of reputation from poor construction practices.
Limited Coverage: Home builder warranties don’t cover appliances, small cracks, and many other items that a home warranty does. Additionally, coverage only protects homeowners against material defects and does not cover degradation of materials due to natural use or damage caused by weather, repairs, or additions to the home.
Expiration Limits: Most home builder warranties only last for 10 years and only cover major structural problems after two years.
The Importance of Quality Assurance Programs
While builders’ warranties are a great investment for builders, their coverage is still fairly limited. For this reason, we recommend implementing internal quality assurance practices or working with a qualified consultant to create these.
For example, conducting routine inspections during each phase of the construction process will identify any possible defects and issues that could be costly down the road. Most importantly, an inspection will identify any small repairs, such as poorly installed ductwork, improperly installed rails, or cracks in your exterior that could be pesky for the homeowner.
In time, by adding the right incentives and investing in the right QA practices, your business could shield itself from financial damages and cultivate a reputation that reflects your quality. In turn, this will only gin up more opportunities for your business and allow your crew more time to focus on new projects, instead of repairing old ones.