Home Warranty vs Home Builder’s Warranty: What’s the Difference?

Owning a home comes with inevitable repair costs, which is why warranties are so appealing. But while home warranties and home builder’s warranties sound similar, they protect against very different risks. Knowing the difference can save you from costly surprises.

A home warranty covers the systems and appliances you use every day, like your HVAC, plumbing, and kitchen appliances, when they fail from normal wear and tear. A home builder’s warranty is tied to new construction and protects the home’s structure and workmanship, often covering things like the foundation, framing, or roofing materials.

The type of warranty you need depends on your home’s age, condition, and the repairs you’re most likely to face. This article breaks down the differences, shows where coverage overlaps, and helps you decide whether a home warranty, builder’s warranty, or both make the most sense for your situation.

What a Home Warranty Covers (and Doesn’t)

A home warranty focuses on the mechanical breakdowns that are almost guaranteed to happen as your home ages. In fact, 95% of U.S. homeowners have experienced a major appliance failure, with more than 40% reporting one in just the past year. Even with regular upkeep, appliances and systems have limited lifespans. Refrigerators last about 9 to 13 years, while HVAC systems can stretch to 15–25 years.

Because repair costs can range anywhere from $50 to $3,500 depending on the system or appliance, many experts recommend budgeting 1% to 4% of your home’s value each year for maintenance and unexpected fixes. A home warranty helps offset those unpredictable expenses by providing consistent coverage for the items you rely on most.

Typically covered items include:

• HVAC systems (heating, ventilation, and air conditioning): Repairs or replacements for furnaces, central air units, and sometimes ductwork. HVAC breakdowns can be among the most expensive, often costing several thousand dollars.
• Plumbing and electrical systems: Coverage for leaks, clogs, wiring issues, or circuit failures that could otherwise lead to costly service calls and water or fire hazards.
• Kitchen appliances: Items like refrigerators, ovens, dishwashers, and built-in microwaves are often included since they’re heavily used and prone to wear over time.
• Laundry appliances: Washers and dryers can also be covered, which helps protect against sudden breakdowns that disrupt daily routines.

What’s not covered:

• Pre-existing conditions: Problems that existed before the warranty began usually fall outside coverage, since warranties are meant for future issues.
• Cosmetic damage or improper installation: Scratches, dents, or incorrectly installed equipment aren’t included, as warranties cover function rather than appearance or human error.
• Structural issues: The foundation, walls, or roof of your home are not covered by a home warranty. These fall under different protections, like builder’s warranties or homeowners insurance.

Think of a home warranty as an ongoing safety net for the working parts of your home. It doesn’t protect the structure, but it does help ensure the appliances and systems you rely on daily can be repaired or replaced without draining your savings.

What a Home Builder’s Warranty Covers (and Doesn’t)

A home builder’s warranty, sometimes called a “structural warranty,” is typically included when you purchase a newly built home. Unlike a home warranty, which you buy from a third-party company, this type of coverage is provided directly by the builder as a guarantee of quality. It is designed to reassure buyers that the home was built to standard and that major defects will be corrected within a set timeframe.

Usually covered:

• Workmanship and materials: Items such as flooring, windows, doors, drywall, and trim are often covered for the first year. If paint begins to peel, doors won’t close properly, or tile grout cracks prematurely, these issues typically fall under workmanship coverage.
• Mechanical systems: Plumbing, electrical, and HVAC installation are often covered for up to two years. This ensures that critical systems installed during construction were done correctly and function as intended during the early years of homeownership.
• Structural elements: Foundations, load-bearing walls, roof framing, and other key structural components are usually covered for a longer period — often up to ten years. This protects homeowners from major defects that could compromise the home’s safety or livability.

What’s not covered:

• Normal wear and tear: Everyday deterioration of materials and surfaces is expected and not covered by the builder’s warranty. For example, a carpet wearing down after several years of use would not be eligible for a claim.
• Appliances not installed by the builder: Kitchen or laundry appliances included by the homeowner after purchase fall outside this coverage, since builder warranties only apply to construction and installation done by the builder.
• Home systems after the initial coverage period expires: Once the coverage timeframe ends (typically one to two years for systems), ongoing issues or breakdowns fall outside the builder’s responsibility.

This type of warranty is a powerful safeguard for buyers of new homes, ensuring the builder stands behind the integrity of their work. However, it is time-limited and does not extend to the kinds of everyday repairs and replacements that become necessary as a home ages.

Key Differences Between the Two

While both offer valuable protection, home warranties and builder’s warranties cover different risks.

While both offer valuable protection, home warranties and builder’s warranties address very different risks. A builder’s warranty is essentially a promise that your new home was constructed properly and that the materials and workmanship meet industry standards. It focuses on preventing structural or installation-related issues from becoming your financial responsibility in the first years of ownership.

A home warranty, on the other hand, is more about the day-to-day functionality of your home. Systems and appliances inevitably wear down over time, regardless of how well the house was built. That’s where a home warranty becomes valuable; it steps in to cover those breakdowns long after the builder’s responsibility has ended.

In practice, these two warranties complement each other. A new homeowner might rely on a builder’s warranty for the first few years, then transition to a home warranty to protect against the gradual wear and tear that comes with everyday living. For older homes, where a builder’s warranty no longer applies, a home warranty often becomes the only option for ongoing protection.

When You Might Need Both Types of Coverage

For new builds, a builder’s warranty provides peace of mind during the early years. Once that coverage ends, homeowners are left exposed to costly breakdowns of appliances and systems. That’s where a home warranty becomes especially valuable.

Examples:

• New homeowners: You may rely on the builder’s warranty at first but add a home warranty later to cover appliances.
• Older homes: A builder’s warranty will not apply, so a home warranty becomes the go-to option.
• Transition periods: Having both ensures there are no gaps. The builder covers structural elements, while the home warranty protects day-to-day systems.

How to Evaluate Which Warranty You Need

When deciding on coverage, consider:

• Your home’s age: New builds benefit from builder warranties, while older homes benefit from home warranties.
• Appliance and system condition: Aging systems mean higher repair risks, making a home warranty worthwhile.
• Budget and risk tolerance: If surprise repairs would strain your finances, ongoing warranty coverage can be a smart investment.

Tips for Maximizing Warranty Coverage

• Read the fine print: Understand exclusions and claim limits before signing.
• File claims promptly: Address problems early to prevent them from becoming bigger issues.
• Combine with homeowners insurance: Insurance covers damage from events like fire or storms, while warranties cover mechanical breakdowns.
• Renew proactively: Keep your coverage active to avoid lapses in protection.

FAQs

Is a builder’s warranty the same as a home warranty?
No. A builder’s warranty is included with new homes and covers structural issues and workmanship. A home warranty is purchased separately and covers appliances and systems.

How long does a home builder’s warranty last?
Typically 1 year for workmanship, 2 years for mechanical systems, and up to 10 years for major structural elements.

Can I buy a home warranty if I already have a builder’s warranty?
Yes. Many homeowners combine both types of protection to cover all bases.

Do home warranties cover structural issues?
No. Home warranties only cover appliances and systems. Structural concerns are addressed under builder’s warranties or homeowners insurance.

Smart Protection for Every Stage of Homeownership

A builder’s warranty is a great start for new construction, but it will not cover your appliances or last forever. A home warranty, like those offered by ARW Home, provides ongoing peace of mind and financial protection no matter the age of your home.

Ready to explore your options? Check out ARW Home warranty plans and see how ongoing coverage can keep your home protected long after your builder’s warranty ends.