What is a New Home Warranty?

A new home warranty is a written agreement that defines what is covered in a newly built home, who is responsible for repairs, and how long that coverage lasts.

Most new home warranties include multiple phases of coverage, typically starting with builder responsibility and transitioning to 3rd-party longer-term structural protection.

For builders, a structural warranty helps reduce risk, clarify responsibilities, and provide confidence to buyers and lenders.

In summary, a new home warranty is a written agreement that defines what is covered in a newly built home, how long that coverage lasts, and who is responsible for repairs. Most new home warranties include short-term builder coverage and longer-term structural protection.

Types of New Home Warranties

• Builder warranty (1–2 years)
  A builder may offer a 1-2 year warranty on their homes. This type of warranty is typically a verbal agreement with the buyers, and usually covers a call-back or punch list of items the builder will fix for them. The 1-2 year warranty usually does not offer structural coverage. A builder-backed warranty can be a financial risk. It also leaves the builder vulnerable to financial issues and sometimes contention over coverages.

• Structural warranty (10 years)
  In contrast, a 10-year new home warranty normally covers specific things during the 10-year period. Year 1 coverage is the most extensive, usually encompassing workmanship and materials, delivery systems and structural coverage. Year 2 normally drops the workmanship and materials, but covers the other categories. Both years 1 and 2 are the builder’s responsibility. Then in the remaining years, the warrantor takes over coverage, which is only for specific warranted structural defects.

• Third-party vs builder-backed
  Unlike a 1-2 year builder warranty, a structural warranty provides long-term protection against major structural defects and is often backed by a third-party provider. Having a 3rd party warrantor alleviates much of the risk for the builder and also ensures a resolution process if a dispute arises.

Why New Home 10-Year Warranties Matter for Builders

• Risk management
• Clearer expectations
• Fewer disputes
• Lender requirements
• State Requirements
• Buyer confidence

A Quick Breakdown of Warranty Coverage

Our most popular warranty is the 10-year structural warranty. The coverage breaks down into year 1, year 2 and years 3-10. For year 1, the builder is responsible for defects in workmanship and materials, major delivery systems and specific warranted structural defects. In year 2, the builder also covers major delivery systems and specific warranted structural defects. During years 3-10, the Warrantor picks up the coverage for specific warranted structural defects. This 10-year written warranty clearly explains to both the builder and the homeowner who is responsible for covered repairs.

In addition to 10-year warranties, some states, such as Texas, permit 6-year warranties. With a 6-year warranty, the coverage is similar to the standard 10-year one. The builder has identical responsibilities in years 1 and 2, but the warrantor covers years 3-6 only. After that, the warranty is no longer active.

Questions?

Visit our helpful Warranty Coverage FAQ Page to get more insight:

Affordable, Convenient and Hassle-Free

We make securing your business’s reputation and peace of mind simple with our online home warranty purchase process. After you are a member of American eBuilder’s Warranty Program, you won’t ever have to send in mounds of paperwork in order to get your warranties; instead, you can purchase a warranty with a few fast clicks. What could be easier?

Contact American eBuilder at 717-526-2090 and discover how we can protect your new home, investment and reputation with a structural warranty today.