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What is a New Home Warranty?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 17 September 2016
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    Conjecture Corporation
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A new home warranty is a type of warranty that is issued as part of the home protection on a dwelling that has recently been completed and sold. As with any type of home warranty, this new home warranty coverage helps to cover specific costs in the event that certain events take place related to a failure of some portion of the construction, or damage to certain fixtures, such as appliances or the plumbing systems. As with most warranties, the scope of coverage will vary, based on the terms provided by the entity issuing the protection and any governmental regulations that may apply.

In many instances, the new home warranty is issued and backed by the company that built the home. In some nations, the warranty is actually created and serviced by a third party who enters into an agreement with the builder to provide this type of service. Both local and national regulations will have some impact on the terms and provisions found within these home warranties, a strategy that helps to ensure that consumers who purchase and pay for these new homes have at least some protection from issues that arise due to problems with how the building project was executed.

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While the scope of coverage associated with a new home warranty will vary somewhat, there are a few basics that tend to be included. One common example of coverage is protection against defects with the major systems included in the construction. For example, the warranty is highly likely to cover incidents in which the ductwork or the equipment associated with an HVAC system fail during the course of what is considered standard and normal usage. In like manner, provisions within the new home warranty are highly likely to cover issues that develop with the electrical or plumbing systems through no apparent fault or negligence on the part of the homeowner. Here, the warranty helps to protect the owner from incurring out of pocket expenses for events that are beyond his or her control.

The duration associated with a new home warranty will also vary. Depending on the nature of governmental regulations, the warranty may remain in effect for as little as a few years or provide protection for the duration of the original mortgage used to acquire the newly built home. In some nations, if the original owner chooses to sell the property after a few years, the second owner may be provided with some sort of limited coverage on specified systems within the home for some period of time. Since regulations and practices regarding what a new home warranty may or may not cover will vary in different jurisdictions, it is important to read the text of the warranty thoroughly. Doing so makes it possible to understand what is and is not covered, the circumstances that must be present in order for the warranty to cover an unforeseen events, and how long the warranty will actually be in force.

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