A home warranty for a new home is a contract that covers certain types of home repairs. Builders often provide warranties for new homes, and new home sellers might provide them as buyer incentives. Homeowners can also buy a home warranty for themselves.
What does a builder’s warranty cover?
A builder’s warranty is a warranty on new construction and sometimes remodeling work. Generally, the builder of a new construction home is going to vouch for their work via a warranty for the new home. These warranties often last between six months and two years.
What’s usually covered
Typically it’s workmanship, installation and construction processes, and materials, such as the framing, concrete floors, windows or paint.
What’s usually not covered
A builder’s home warranty for a new home typically doesn’t cover appliances, such as the dishwasher or stove. You may be able to buy coverage for appliances and other items with a separate home warranty.
What to know
Before you commit to a home builder, ask what the builder’s warranty covers and for how long.
Home builder’s warranty vs. regular home warranty vs. home buyer’s warranty
The main differences between a home builder’s warranty, a regular home warranty and a new home buyer’s warranty are who provides the warranty, what is covered and for how long.
-
Builder’s warranty: A builder’s warranty for a new home usually is provided by the construction company to cover defects in workmanship and materials, often for six months to two years.
-
Home warranty: A home warranty is a service contract under which you agree to pay a monthly or annual fee in return for future repairs or replacement of certain covered items for specific reasons. Typically you also agree to pay a flat fee for service calls.
-
New home buyer’s warranty: This term typically refers to a home warranty that is included in a real estate contract, usually as an incentive. Who pays for the home buyer’s warranty depends on the real estate contract.
Although some home warranty companies earn a strong reputation and effectively defray the costs of the repairs they cover, other companies make the process cumbersome or cost-intensive. For instance, consumer complaints arise against service contract providers for some of the following:
-
Opaque or work-intensive processes for scheduling service calls and getting repairs.
-
Limitations on who can perform the repairs or what brands of product will be used, which may result in lower quality workmanship, with limited recourse for additional repairs.
-
Claim caps, meaning some warranty companies only pay a flat amount for a repair or replacement, even if what you need is much more expensive.
-
Fine print, such as requirements to use private arbitration rather than going to court if there is a conflict.
Nerdy Tip
If you buy a new home, layering a home warranty on top of a builder’s warranty can provide additional security if you’re worried that something expensive might break. However, the often limited coverage home warranties provide makes it important to weigh whether you may come out ahead by putting the money you would normally spend on the warranty premium into a bank account for future repairs instead.