Best Home Warranty for New Construction

Comparison: best home warranties for new construction

The table below compares our picks for the best home warranties for new construction coverage.

Our top 3 picks for new construction warranties

We researched 26 home warranty companies, comparing them based on features like cost, availability, contracts and coverage. We also analyzed reviews submitted by verified customers that mentioned new construction, builder warranty or similar topics. We then used this data to select our picks for the best home warranty companies for new construction.

Our home warranty picks for new construction include:

• Our top pick overall: American Home Shield
• Our pick for combo coverage: Choice Home Warranty
• Our pick for low starting costs: Cinch Home Services

How do home warranties for new construction work?

New construction home warranties provide financial security in the event that an expensive system or appliance breaks down after the final inspection.

Builder warranty coverage typically lasts between one and 10 years.

Builder home warranties offer limited coverage on materials and workmanship for a certain amount of time. Coverage typically lasts between one and 10 years, but the length of time is dependent on your home’s features and the specifics of your plan.

With these warranties, it’s important to submit a claim as soon as an issue comes up. Otherwise, you might be denied coverage. In addition to listing what’s covered and what’s excluded, the contract should specify how long you have to contact the home builder or home warranty company once you find a problem.

How to dispute a warranty claim

So, what happens if you believe your claim should be covered by the warranty? Whether you’re working with the builder or a third-party warranty company, disputed warranty claims are typically handled through mediation and arbitration. The same goes for those who purchased a home with FHA and VA loans. Disputes are handled with the builder or warranty company.

Carefully read any contract first — most will limit a policyholder’s ability to solve the dispute in court.

If the dispute requires mediation, a neutral third party will try to resolve the problem after hearing claims from both the homeowner and company. If both parties fail to come to an agreement, the claim will go to arbitration. Instead of going to court, an arbitrator or a panel will hear both sides of the case and make a decision, similar to a court hearing though less formal.

In terms of costs, you may spend a few hundred to a few thousand dollars for mediation and arbitration. Your contract will dictate who pays for these fees and how much. Some costs are evenly split between the homeowner and company, while other companies may require you to pay an upfront fee.

» MORE: What is a homebuilders warranty?

What does a builder warranty cover?

Standard builder warranties include coverage for materials, labor, certain home systems and the physical home structure. They may also cover paint, siding and windows, which typical home warranty plans don’t usually cover.

The coverage level and length varies by company and plan, but for most new construction homes you can expect what’s known as a 1-2-10 warranty:

• One year: For workmanship and materials used to build the home, a builder home warranty typically provides coverage for a year. 
• Two years: Coverage for systems such as heating, ventilation and air conditioning (HVAC), plumbing and electrical usually lasts two years. If you want to continue coverage for major systems, you would need a third-party home warranty plan.
• 10 years: Major structural defects are sometimes covered for up to 10 years. These defects might include foundation issues or a roof that collapses due to a structural defect.

What builder warranties don’t cover

Builder warranties don’t cover components or parts that are covered under a manufacturer’s warranty. For example, if your new oven suddenly stops working and is still under warranty, you will contact the manufacturer, not the home builder. For extended coverage past the manufacturer warranty, consider a standard home warranty.

Builder warranties also generally don’t cover minor defects in drywall, cement, brick and tile. They also don’t cover damage to your home due to weather events like lightning, wind or hail.

» MORE: What does a home warranty cover?

Is a new construction warranty worth it?

Most new homes come with a builder warranty, according to the Federal Trade Commission (FTC), but a new construction warranty might be a good idea if yours doesn't come with one or if the builder warranty isn't comprehensive.

Builder warranty vs. supplemental warranty vs. homeowners insurance

Understanding where you may have coverage gaps can help you decide if a home warranty is worth it. Because most builder warranties only cover major systems for two years, it may be worth it to purchase a home warranty plan afterward. Similarly, new home appliances typically come with a one-year manufacturer warranty, so you won’t have coverage if an appliance breaks afterward.

As for homeowners insurance, you should have it even if you have a new construction warranty. Insurance can protect against theft, vandalism and natural disasters — things not covered with any type of home warranty.

How to evaluate a builder warranty

When choosing a home builder, you should ask about the new construction warranty that comes with the property and read over the terms carefully. Make sure you understand the procedure for filing a claim, time limits for each type of claim, coverage expiration dates and what is and isn’t covered in the warranty.

Most reputable companies will provide a sample contract so you can better understand each of these factors and decide if the coverage makes sense for your home and budget.

“Ultimately, whether or not a home warranty is worth it depends on your situation and budget,” said Jennifer Spinelli, a real estate advisor for The Agency in Tampa, Florida. “Be sure to research and compare the different plans available to find one that fits your needs and budget in order to get the best value.”

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