What Is a Builder's Warranty? Coverage, Duration, and How It Works

If you are shopping for, or in the process of buying, a newly constructed home, your real estate agent or the developer may have discussed the builder’s warranty. It’s important to understand what a builder's warranty is, how it works, and what it covers, so you know what to expect after you’ve purchased a brand-new home.

In this guide, we’ll answer questions you may have, such as how long does a builder’s warranty last and what’s included in builder warranty coverage (and what’s not). We’ll also provide details on other types of warranties so that after your builder’s warranty expires, you can still maintain essential budget protection.

What Are Builder’s Warranties?

Newly constructed homes come with many benefits. You often get to pick the floor plan, decide on options such as adding bedrooms or bathrooms, or select outdoor structures like porches or patios. You also get to choose paint colors, flooring, cabinets, fixtures, and appliances. So, when you buy a brand-new home that’s exactly to your specifications, it’s easy to think, “What could go wrong? It’s brand new.” Unfortunately, even brand-new homes can have issues, which is why a builder’s warranty matters.

Like a new car that comes with a manufacturer’s warranty, a new home usually comes with a builder’s warranty. This warranty, also called a home builder or structural warranty, is what builders provide as a guarantee of their craftsmanship for a newly constructed home. Builders can offer the warranty themselves or provide coverage from an independent company.

Related: New Home vs. Existing Home: Which Should You Buy?

Why Do You Need a Builder’s Warranty?

It’s natural to assume everything should work perfectly in a new home, but that is not always true. In an ideal world, everything in a new home is built and installed perfectly. But builders are human and make mistakes like everyone. Sometimes, the materials they use are defective. Or the parts and equipment they install can be faulty. These issues aren’t always obvious, or they don’t show up immediately.

What’s Covered in Builder Warranties?

A home builder's warranty varies, but generally covers:

• Workmanship, such as guaranteeing the work is done correctly and doesn’t have defects.
• Major structural issues, such as with walls, floors, and foundation.
• Exterior home features, such as roofing, windows, doors, and siding.
• Home systems, such as heating, ventilation, and air conditioning (HVAC), electrical, and plumbing.

Your builder should provide you with a complete list of what is covered. When you review it, be sure to ask the builder any coverage questions you have, such as:

• Builder’s warranty expiration date
• Expiration dates for time-sensitive items (e.g., cosmetic vs. structural issues)
• Transferability of warranty, if any
• Process for submitting a claim

Most builders’ warranties have specific procedures and time frames for making claims. Make sure you read and understand the warranty terms before you sign a contract to buy a new home.

What’s Not Covered in Builder’s Warranties

A builder’s warranty won’t cover everything in the home. These items typically are not covered:

• Items covered by a manufacturer’s warranty.
• Appliances, such as the refrigerator, stove, dishwasher, and more (a manufacturer’s warranty may cover new appliances).
• Repairs that are needed due to normal wear and tear.
• Damage from natural disasters.

How Long Does Builder Warranty Coverage Last?

A home builder’s warranty covers items for different lengths of time. It’s often referred to as a structural warranty because this aspect of the coverage lasts the longest. Here is how long coverage typically lasts:

• Structural Defects: 10 years, for problems with the foundation, walls, and roof framing.
• Home Systems: 1 to 2 years, for plumbing, electrical, and HVAC.
• Workmanship and Materials: 1 year for workmanship, materials, and other items not covered by a manufacturer’s warranty.

Builder’s Warranty vs. Home Warranty

Your builder’s warranty typically covers new systems in your home, such as plumbing, electrical, and HVAC, for one to to years. When something happens to these systems, you contact the builder or their warranty company.

A manufacturer’s warranty usually lasts one year and may cover your home’s appliances. If your dishwasher or refrigerator breaks in the first year, you need to contact the manufacturer.

After the builder’s and manufacturer’s coverage expires, you must pay to repair or replace these items — and find a contractor to do the work. You can avoid that stress and ensure your home systems and appliances are protected by purchasing home warranty coverage, as many home buyers do.

A home warranty for new construction starts working in the second year, when many other warranties end. It gives you a simple way to cover the costs and hassle of fixing many crucial home systems and appliances when they fail.

Builder’s Warranty vs. Homeowners Insurance

If you’re wondering if you need homeowners insurance if you have a builder’s warranty, the answer is yes. While your home builder’s warranty covers many features of your new home, it doesn’t protect against things that might happen to your home, such as a natural disaster, fire, vandalism, or theft. Homeowners insurance covers these items and protects you if someone is injured on your property. While these are things a home builder’s warranty doesn’t cover, there are numerous important items a builder’s warranty does cover, including home systems like an HVAC system, electrical, and plumbing. Review the above list under ‘What Does a Builder’s Warranty Cover’ for more details.

Related: Homeowners Insurance vs. Home Warranty: Why You Need Both

What is a New Construction Home Warranty?

When you buy a newly built home, you can also ask your real estate agent to purchase what’s called a new construction home warranty. This covers your new home’s appliances and systems from the second through fifth years after most builders’ and manufacturers’ warranties have ended. It’s not just older appliances and systems that break, and the last thing you need is an unexpected expense.

A new construction home warranty from First American:

• Protects your budget from unexpected repair and replacement costs.
• Saves you the trouble of finding a service technician.
• Provides a simple way to get covered items fixed.
• Covers home systems and appliances in years 2 through 5.

Here's how a new construction warranty works:

• You contact us when a covered home system or appliance breaks.
• We’ll assign a prescreened service provider to diagnose the issue.
• The service provider will confirm coverage and repair or replace the covered item*

As a home buyer, you’ll also get special pricing and expanded home warranty coverage.

Warranty Timeline: How Long Coverage Lasts

Knowing the different time frames and expiration dates for all the warranty types we’ve covered here can help you easily track when each plan is expected to expire. You may be able to replace expired coverage with another plan to help you maintain budget protection. Here are the typical time frames for how long these warranties last:

• Builder’s Warranty: 1 to 2 years for home systems
• Manufacturer’s Warranty: 1 year on new appliances
• New Construction Home Warranty: Covers years 2 through 5 (can be purchased after manufacturers’ warranties expire)
• First American Home Buyers Warranty: 1-year renewable service contract (for homes that are not newly built).

Builder’s and New Construction Warranty FAQs

When does a home warranty start on a new build?

For new construction, a home warranty plan is designed to begin after the builder's warranty expires. First American's new construction home warranty plan begins 12 months after the close of sale and continues for 48 months, covering years 2 through 5 of homeownership.

How do you buy a new construction home warranty?

• Ask your real estate agent to order a First American home warranty. The warranty cost can be included in the closing costs.
• Call our Real Estate New Orders department at 800.444.9030 and select option 3. Our friendly agents will walk you through the ordering process.

Does a home warranty cover structural defects, such as wall cracks?

No, home warranties don’t cover the structure of a home, including cracks in walls.

Does a builder’s warranty cover appliances?

A builder’s warranty does not cover appliances, but you can purchase a new construction home warranty in the second year, after appliance manufacturer warranties expire, that can last 2 to 5 years.

What does a builder’s 1-2-10 warranty cover?

A builder’s 1-2-10 warranty is another name for a builder’s warranty and is also called a structural warranty or a 1-2-10 builder warranty. It’s named after the length of coverage and covers issues with the workmanship and construction materials as follows:

• Workmanship: 1 year
• Electricity distribution systems: 2 years
• Structural defects: 10 years

The length of these warranties and what they cover can vary by state, builder, or the sponsoring warranty company.

 

*Please review the sample contract for specific coverage, terms, and limitations.