Should I Get a Home Warranty For My New Home?

Home warranty

Buying a new home is one of the biggest financial investments. It can be exciting and nerve-racking at the same time. After spending time, money, and hard work to build or buy your dream home, the last thing you want to do is pay more money for repairs and replacements. There’s a possibility that certain devices in your home (especially if it was pre-owned) will break down or not work properly. So, you can purchase a home warranty for your new home, to save money on such things. 

A home warranty is a service contract that covers the repair and replacements of major household systems and appliances that break down due to normal wear and tear. It lets you save money on unexpected repair expenses. 

There are two types of home warranties for new homeowners: the home warranty and the builder’s warranty. If you are purchasing a newly built property, you may get a builder’s warranty with it. However, you can also purchase a home warranty, if you are bringing in old systems and appliances that are not under manufacturer’s warranty. If you are moving to a pre-owned home, a home warranty is a good idea for you.

We have listed what both of these home warranties cover, how and when you can use them, the costs, and reasons why getting them may be a good idea to protect your new home. Keep reading to learn more.

Builder’s Warranty (New Home Warranty) Home Warranty
What is it? It is a warranty plan provided by the builder for newly constructed homes. It is a service contract for inexpensive repairs and replacements.
Coverage It offers limited coverage on workmanship, and items such as concrete floors, electrical or plumbing work, windows, HVAC. It covers repairs and replacements of critical home systems and appliances, such as HVAC, refrigerator, water heater, plumbing, and electrical systems, etc.
Length Most builder warranties cover workmanship for a year or two, but for major structural elements, it can last as long as 10 years. It typically lasts for a year but can be renewed every year.
Claims If any of the covered items break down, you can file a claim using the instructions provided in your contract. There is a waiting period of usually 30 days. Once it ends, you can start filing the claims using the instructions mentioned in your service contract.
Cost The builder will be responsible for the premiums of the warranty. The average cost of a home warranty can range anywhere between $300-$600 annually, along with standard deductibles of $60-$125 per visit. It is paid by the homeowner.

 

Reasons to Ask for a New Home Warranty

The issues in new homes are more common than you would think. Even after a home inspection, there is a chance that something might go wrong. Sometimes a builder may use defective materials that weaken the structural integrity of the house. Here are some of the other reasons a new home warranty may come in handy, and why you should ask your builder for one or buy a home warranty:. 

1. Hidden defects

Even if you get a thorough home inspection, there could be some defects. Such issues are not always readily detectable, and you may notice them after living in the house for a while. So, there are some special plans for new home buyers which you can consider getting. It covers failures due to pre-existing conditions or due to improper installations, modifications, or repairs.  

2. Quality is not guaranteed

The newly constructed homes may pass the final inspection checks, but the quality is not always guaranteed. The house may contain problems like:

  • Plumbing or electrical issues
  • Ductwork
  • Clogs or stoppages
  • Cracked Fixtures

A home warranty can provide protection against these issues and many other unforeseeable such as systems or appliance breakdown due to normal wear and tear, roof leaks, faucet leaks, etc.

3. The duration and coverage of a new home warranty or builder’s warranty is as follows:

  • 1-year warranty – It covers workmanship and materials.
  • 2-year warranty – It usually covers electrical, plumbing systems, and HVAC.
  • 10-year warranty – It is for structural elements.

It is a great offer, but it does not cover some items of your home such as refrigerator, garage door openers, kitchen, bathroom appliances, and key parts of A/C. If you bought a pre-owned home, these items are likely out of the builder’s warranty or OEM warranty. In such cases, you can consider adding extra protection to your new home by investing in a home warranty policy too.

There are plenty of home warranty companies serving comprehensive plans to their customers. However, to know the specifics, you should go through the terms and conditions of your warranty contract thoroughly. Then, you can make a beneficial purchase and save your hard-earned money in the long run. 

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.