Should I Have a Home Warranty on New Construction?
New homes come with certain protections for buyers, but a home warranty can provide even more peace of mind and financial security. This type of warranty covers the repair or replacement of major home systems and appliances due to normal wear and tear, and is different than a builder’s warranty. Learn how the two differ, and whether the extra layer of protection that a home warranty provides is right for you, in our guide.
Understanding Home Warranties for New Homes
You must learn what, exactly, a home warranty covers and how it differs from other policies before you decide whether it’s right for you. Read more below.
What Is a Home Warranty?
A home warranty is a service contract that covers the repair or replacement of major home systems and appliances that break down due to normal wear and tear. It is different than homeowners insurance, which protects against damage from events such as fires, natural disasters, theft, or vandalism.
A home warranty requires you to pay an annual or monthly premium, plus a service call fee each time you need a repair. The warranty company covers the remaining costs for repairs or replacements that it covers. This can be particularly beneficial for new homeowners who have tight budgets and need to avoid expensive repair bills.
How Home Warranties Differ from Builder’s Warranties
Home warranties and builder’s warranties serve different purposes. Read more below.
- Builder’s warranty: The homebuilder provides this coverage, and it’s typically included in the purchase price of your new home. It covers structural elements, workmanship, and materials for a set period of up to 10 years, depending on the component.
- Home warranty: This is a separate policy that you can purchase at any time. It covers systems and appliances against normal wear and tear, including items not covered by the builder’s warranty.
A builder’s warranty aims to make sure a home is structurally sound, while a home warranty provides ongoing protection for a home’s systems and appliances. Some builders offer third-party after-market home warranties that extend beyond standard coverage.
Coverage Options for Newly Constructed Homes
You must understand what different coverage types offer when deciding whether a home warranty is right for your new construction. Each home warranty company might offer slightly different options. Shop around for one that fits your specific needs.
Standard Coverage in New Construction Home Warranties
Most home warranty plans for new constructions include coverage for the following:
- Electrical systems
- HVAC systems
- Major appliances such as refrigerators, ovens, and dishwashers
- Plumbing systems
- Water heaters
A builder’s warranty usually covers these items for a short period, and a home warranty can extend protection beyond the builder’s warranty period. Different policies will have different approaches to protecting minor components, such as ceiling fans or garbage disposals.
Standard coverage and builder’s warranty coverage may overlap in some areas, such as plumbing or electrical systems. You’ll get an especially smooth repair experience when multiple warranties intersect.
Conclude your search for the right coverage by making sure the providers you research have favorable reputations and offer hassle-free guarantee fulfillment.
Optional Add-Ons for Enhanced Protection
Many home warranty companies offer additional coverage for the following items in new construction homes:
- Outdoor kitchen appliances
- Pool and spa equipment
- Roof leak repair
- Septic systems
- Well pumps
Some newer constructions feature eco-friendly or advanced technology systems that traditional home warranty coverage might not include. If your home features these elements, see if you can invest in add-on coverage.
Consider your new home’s unique features when you’re selecting a plan, and weigh the potential repair costs against the costs of adding these items to your warranty plan. Remember that adding coverage later may be more expensive. It may also lead to additional waiting periods and pesky inspections.
Consider your local climate, lifestyle factors, or natural events that might stress certain systems when you’re deciding whether to invest in add-ons. If you live in a region that’s prone to heavy rain, for example, investing in roof leak coverage is a worthwhile choice.
Benefits of a Home Warranty on New Construction
Evolving technology, environmental standards, and fluctuating energy markets can affect the way your appliances work. Learn how to approach covering these features of new constructions below.
Peace of Mind Beyond the Builder’s Warranty
A home warranty can provide coverage that extends beyond what’s standard of a builder’s warranty. This is especially valuable for appliances and systems that have short manufacturer warranties. You can have peace of mind that you’re protected against unexpected breakdowns for years with a home warranty.
A strong home warranty plan will help you to maintain your budget, as it buffers you from expensive repair costs. You can be sure your assets are safe, and just focus on enjoying your new home.
Protection Against Unexpected Repair Costs
Systems and appliances can malfunction even in a new home, and a home warranty can shield you from the financial impact of necessary repairs. This can be particularly beneficial if you’ve invested most of your savings into your new home.
Home warranty coverage becomes more beneficial as your home ages. The probability of unexpected repairs increases over time, and a home warranty will cover you when the time for repair or replacement finally comes. Warranty coverage also shields you from repair costs associated with expensive repairs on state-of-the-art appliances. You can invest in the latest technology without fear of having to pay for expensive, unforeseen repairs later.
Potential Drawbacks of New Construction Home Warranties
Home warranties offer many benefits, but there are some potential downsides to consider before you make a decision. Consider cost, contract clauses, and your specific needs before you decide on coverage.
Overlap with Existing Coverage
You may find that your home warranty overlaps with the builder’s and manufacturer’s warranties on your appliances in the first few years in your new home. This could mean you’re paying for coverage you don’t yet need. Review all existing warranties carefully to avoid unnecessary duplication.
Document the beginnings and ends of various coverage periods. This can help you to target specific systems or appliances that can benefit from double coverage. It can also allow you to adjust policy terms that become redundant.
Cost Considerations for New Homeowners
Home warranties come with ongoing costs, such as annual premiums and service call fees. You must carefully weigh these against the potential benefits of coverage and your specific financial situation.
Typical Warranty Periods for New Homes
Determine how long certain coverage plans last before you decide whether to invest in a particular warranty. Read more below.
Builder’s Warranty Duration
Builder’s warranties typically offer tiered coverage:
- One-year warranty on workmanship and materials
- Two-year warranty on systems such as electrical, plumbing, HVAC
- 10-year warranty on major structural elements
These periods can vary depending on the builder and local regulations. Consider whether annual maintenance checks, inspections, or remedial work are necessary to maintain warranty status.
Manufacturer’s Warranty on New Appliances
Most new appliances come with manufacturer warranties that last for up to two years. Some high-end appliances may include longer warranty periods. A home warranty can provide continued protection for these expensive items after manufacturer warranties expire.
Remember to register appliances with manufacturers immediately after you purchase them.
When To Consider a Home Warranty for Your New Construction
Several factors, such as your financial situation, influence if and when you should consider a home warranty. Read more below.
Assessing Your Financial Situation
Consider your budget and emergency fund when deciding if the added expense of a warranty is worthwhile. Determine how closely a particular warranty matches your risk tolerance, and research typical coverage costs to make sure they don’t exceed your budget or anticipated repair needs.
Evaluating the Quality of Construction
All new homes should meet certain standards, but the quality of construction can vary. Research your builder’s reputation and the materials the builder has used in construction. If you have concerns about potential issues down the line, a home warranty might offer valuable protection.
Pay attention to structural features such as foundations in known flood zones or innovative materials that are prone to failure. These might call for a warranty’s coverage sooner than later.
Hire a trusted professional to perform an inspection and offer an accurate assessment of any areas that require close monitoring. These evaluations can help you to distinguish between general and critical needs for repairs.
How To Choose the Right Home Warranty for New Construction
Understanding the intricacies of various plans allows you to select coverage that best aligns with your needs. It will also offer you peace of mind. Consider the factors below.
Comparing Coverage Options
Different home warranty companies offer varying levels of coverage. Some key factors to consider include the following:
- Cost of premiums and service fees
- Coverage limits for each item
- Exclusions and limitations
- Which systems and appliances your coverage includes
Compare multiple providers to find the best fit for your new home. Competitor reviews and consumer protection ratings can help you to find a provider that best meets your needs.
Visit providers’ websites or contact them directly if you have any questions about coverage. Request information about policy terms, and research plans thoroughly so that you don’t encounter any surprises down the line.
Finally, consider whether warranty providers have coverage nationwide in case you plan to move. A transitory home warranty can provide seamless, transferable protection.
Reading the Fine Print
Carefully review any contracts before you sign up for a home warranty. Pay attention to the following:
- Circumstances that might void your warranty
- Processes for filing claims and selecting service providers
- Requirements for maintenance records
- Waiting periods before coverage begins
Understanding these details will help you make the most of your home warranty. Regularly review policy updates, as market changes and consumer reports might change eligibility requirements or the terms of your coverage. Staying abreast of changes allows you to use your warranty more effectively.
Document any relevant details about your home systems starting on your first day of coverage. Keeping detailed records allows you to handle future disputes more easily.
FAQs About Home Warranties for New Construction
How long is a warranty on a new house?
The warranty on a new house lasts for up to 10 years, according to the U.S. Federal Trade Commission. Builders typically cover their workmanship and materials with a one-year warranty. HVAC, plumbing, and electrical systems generally have two-year warranties, while the warranty that covers major structural defects can last up to 10 years.
What are top home warranty providers for new construction?
Liberty Home Guard and Select Home Warranty are the top home warranty providers for new construction homes. Liberty Home Guard provides 24/7 phone support, a 60-day workmanship guarantee, and a selection of 38 add-on coverage options. Select Home Warranty offers budget-friendly plans with affordable service fees, generous discounts, and special perks for new customers.
What is the difference between a home warranty and homeowners insurance?
The main differences between a home warranty and home insurance are the types of damage they cover. Both policies offer some protection for home systems and appliances. Homeowners insurance covers one-time events such as theft or natural disasters, while a home warranty covers normal wear and tear.
What is the warranty process for a new home?
Newly constructed or remodeled homes come with a builder’s warranty. As the new homeowner, you can purchase a separate home warranty, which is also known as a service contract.
Our Rating Methodology
We back up our home warranty ratings and recommendations with a detailed rating methodology to objectively score each provider. We conduct research by speaking with company representatives, requesting quotes, analyzing sample contracts from each company, and conducting focus groups and consumer surveys. We then score each provider against our review standards for coverage, cost, trustworthiness, plan transparency, customer support, and flexibility to arrive at a final score on a 5-point rating scale.
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