New Braunfels, Texas, has been one of the country’s fastest growing cities for residential construction over the past few years. Something else is on the rise too—the number of permits filed for foundation repairs. The amount increased by 118% from 2018 to 2022, with more than 200 applications filed in just the first half of 2023. The primary culprit is drought-related soil shifts and builders unfamiliar with the extra steps and costs necessary to secure homes amid Texas’s unpredictable environment. On a good day, the repair costs $3,000. As for a bad one? Some builders and homeowners are paying up to $60,000 per home.
With the right warranty on these newly constructed homes, the price could be $0.
When it comes to protecting a home, understanding the difference between a structural warranty and a systems and appliance warranty is crucial. Both offer important coverage but protect separate parts of the home for different periods of time. Having them work together is like a one-two punch for avoiding out-of-pocket costs for builders and homeowners.
What Is a Structural Warranty?
A structural warranty, also called a builders warranty, covers major structural defects in a home. This typically includes the structural foundation, load-bearing walls, roof framing, and other critical components essential to the home’s structural integrity.
The timeframe for protection under a structural warranty can vary, but typically includes:
- One year for workmanship and materials
- Two years for major systems/inside the walls
- Ten years for structural elements
Let’s dispel a few common myths about structural warranties.
- Insurance and the warranty do not overlap. Using the foundation example, the warranty would cover the cost of the repair proactively whereas insurance to reactively cover bodily injury or property damage resulting from the issue. The two types of protection work best together.
- While structural warranties are not required in every state, they are much more than a “nice-to-have” protection. An analysis of more than 10,000 structural claims over 32 years found that repair costs averaged more than $42,000 per home.
- Buyers do really care about warranties. A joint survey with the National Association of Home Builders found that 94% of prospective home buyers are more likely to purchase a new home from a builder offering a structural warranty. They perceived the benefit as demonstrating a home of higher quality with better financial protection.
What Is a System and Appliance Warranty?
A system and appliance warranty covers the repair or replacement of essential home systems and appliances. This type of warranty is advantageous to protect against unexpected malfunctions as well as the effects of normal wear and tear over time.
The warranty typically covers major systems including HVAC, electrical, and plumbing. Appliances often include those that come standard with a home, such as refrigerators, washers and dryers, ovens/stoves, water heaters, and many others. Coverage periods may differ, but the warranty typically provides initial protection for two to five years and is then renewable annually.
Research shows appliances are failing at faster rates. A survey from an on-demand home repair provider found that 70% of fixes are on appliances five years or younger. The findings indicate that appliances that should last more than 10 years are breaking down much earlier than expected. The price tags on these malfunctions can be steep with HVAC systems at around $6500 and simple plumbing problem patches reaching $850.
Why Are These Warranties Important?
For homeowners, both warranties offer financial protection and peace of mind. Structural issues are expensive. Without a warranty, homeowners worry about financially crippling out-of-pocket costs. CNBC published research results showing 77% of homeowners experience unexpected home repairs within the first year of ownership. More than 60% indicate the cost exceeds $1,000. Yet May 2024 data from the Federal Reserve shows nearly 40% of U.S. adults cannot cover $400 in emergency expenses without going into debt. Structural and system and appliance warranties ward off these buyer concerns and keep homes in top condition and savings account safe.
These warranties benefit builders by enhancing their reputation and attracting more buyers. In today’s competitive market, where quality and reputation are key factors, providing warranties is a strong selling point. According to Forbes, homes with a warranty sell almost two weeks faster than those without. Research published by the Service Contract Industry Council shows warranties drive up sale prices as well. And if that wasn’t enough of an incentive, warranties help builders maintain a positive, long-term relationship with homeowners. Happier customers are more likely to become repeat buyers and make positive referrals to drive additional sales.
There is another financial boost for builders too. Those choosing an insurance-backed structural warranty forgo the costs of making structural repairs for the duration of the coverage. That means builders can focus on new construction rather than paying for old claims.
Protection Provided by PWSC
Interested in adding home warranties to your toolbelt? Learn more about the benefits of structural and system and appliance warranties for your business from PWSC. Get a quote and discuss the total savings potential for your bottom line. With more than 100 years of combined construction experience, PWSC keeps you and your buyers protected from the unexpected problems that hit homes. Nearly 80% of homebuyers prefer to work with homebuilders who have a proven track record of delivering high-quality homes and are reliable. With PWSC’s warranties at work, you can build trust with your customers, enhance your reputation, and confidently focus on what you do best—creating exceptional homes.
