Updating a Warranty Program Belongs at the Bottom of the To-Do List — MYTH BUSTED

April 28, 2021

Myth Buster: Builder's WarrantiesIn our fourth and final MYTHBUSTERS:  The Home Builder Edition, PWSC addresses the variety of reasons builders put off incorporating, re-evaluating, or updating their warranty program…

Builders are busy. New housing starts and permits currently sit at a five-year high. With that comes a list of tasks longer than there are hours in the day. The litany of duties during a building boom often leaves one item at the bottom of the priority list: updating the warranty program. The reasons range from “that’s too difficult” to “we’ve always done it that way” and “claims aren’t an issue for us.” But when it comes to a company’s reputation, customer satisfaction, and the bottom-line financial impact, there is never a good excuse for putting off changes to your builder warranty.


Excuse #1: Changing Warranty Programs Is Tough and Time Consuming

Warranty programs touch multiple parts of a builder’s business, so making a change does require some strategic planning. Approaching the process thoughtfully across three major steps avoids the most common challenges.

First, create a process for adding updated warranty language to sales contracts and including the new warranty documentation. Next, review your builder performance standards. Re-evaluate builder requirements and where gaps exist that could create claims. Finally, provide training on the warranty changes to impacted departments, including customer service and finance.

When selecting a new warranty provider, look for partners like PWSC who manage training and document reviews. This service accelerates the implementation and ensures a smooth transition with minimal effort required from the builder.


Excuse #2: The Timing Isn’t Right While We’re Growing So Quickly

When business booms, so do claims. Builder home warranty claims reached about $728 million for U.S.-based companies in 2020. Indicators show that number will increase for 2021. That makes this the ideal time for revisiting a warranty program because more claims will occur. Ensuring the warranty addresses common defects while protecting the builder financially is critical as construction ramps up.

Increased building activity also creates an ideal scenario for extending a product line, expanding business to new states, or engaging in mergers and acquisitions. However, warranties are not one size fits all and should be considered part of any growth strategy. New home models may require unique warranties to address different types of materials and construction. Warranty regulations and types also can differ by state. Acquired companies may use warranties with language specific to their business. Using outdated or non-compliant warranties is a costly mistake—one most likely to occur when the business is in grow mode.

Updating a Warranty Program Belongs at the Bottom of the To-Do List—Myth Busted


Excuse #3: Why Change When All Warranty Programs Are Basically the Same

No two insurance policies are exactly alike and neither are builder home warranties. Policies may exclude certain coverages, require deductibles, limit services, or offer different protection durations. The breadth and depth of coverage also dictates rates. A lesser warranty may work for a starter home but fall short to financially protect against issues for high-end home construction. Builders should review their warranty insurance policies with the same level of scrutiny as commercial general liability, workers’ compensation, or auto insurance.


Excuse #4: We Manage Warranties Internally, so We Don’t Need a Third-Party Administrator

Third-party administrators also deliver a benefit even the best in-house programs cannot: neutrality. Sometimes builders and homeowners reach an impasse in negotiating a claim. Builders want to retain the homeowner’s trust while also avoiding excessive costs. A trusted third party like PWSC, with construction and mediation expertise, can create a mutually beneficial resolution saving everyone time, money, and stress.


Stop the Excuses with PWSC

Eleven of the top 20 home builders in the U.S. work with Professional Warranty Service Corporation. Our company offers full-service risk management support with tailored builder warranty programs for businesses of all sizes. PWSC helps builders mitigate risk while keeping customer satisfaction top of mind. Now is the right time to revisit your builder warranty program, so consider this myth BUSTED. Learn how PWSC makes the process easy—no excuses needed.