Your New Home Warranty

Typically, (although not required by law) new home owners benefit from a new home warranty. Under this warranty, the builder is required to repair any item once the homeowner complains (better to do this in writing).

This normally is a one year warranty on workmanship and materials. Coverage begins on the day the new owners take possession of their home, and remains in effect for 365 days, even if the home is re-sold before the warranty expires.

Plumbing and electrical systems are typically covered by the new home warranty. The covers electrical panels, wiring, indoor pipes and drains. Outdoor systems (like sprinklers) are not usually covered.

Built-in heating and cooling equipment, such as heat pumps, furnaces, air conditioners, including ducts, are covered, but portable air conditioning or heating units are not. This coverage is made more important by the high cost of repair to these units.

The homeowner should receive a warranty document at the closing. In addition, you might be presented with several optional warranties for appliances and HVAC equipment. These warranties are usually offered by the manufacturers and vary in length and cost.

If something goes wrong, contact the manufacturer, not the builder. Regarding the HVAC equipment, you should get a service contract with a local dealer in order to enforce the warranty.

Some builders offer what's known as an "insured warranty". There are two types - one is an optional extension of the home warranty beyond the one year period (usually to 2 years). The other type is actual insurance on the warranty, issued by an insurance company, guaranteeing the warranty in the event that the builder goes out of business.

Companies may deny a claim for reasons of homeowner's neglect, pre-existing conditions, or because the nature of the repair is not covered by the warranty.

These optional policies usually range in cost between $300 and $500 per year, with a deductible of $50 to $100 per repair. They usually won't allow you to combine 2 or more repairs into one service call.

I can't imagine what questions you might have about a new home warranty, but if you do, click here. The answers (if I can find them) are free.

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