Builders’ Warranty Insurance Explained


A builder’s warranty is a contract between a builder and the homeowner where the builder promises to make repairs or replacements of certain elements in a home within a predetermined time frame. 

The warranty provider’s insurance typically takes over and pays for any significant repairs in a home. Any hiccups and non-structural issues are however a homeowner’s responsibility. This post will look at builders’ warranty from Advantage Insurance, what it includes and why you should get one for your business. 

Possible Additions To a Builders’ Warranty

Additionally, some policies provide coverage for:

• Contaminated land

• Infraction of the building regulations 

• Temporary accommodation required by the homeowners

• The cost of the removal of debris from the site

Why Buy a Builder’s Warranty?

It gives you peace of mind. You know that you are covered if significant structural flaws are discovered years after a build has been finished. Granted, major structural flaws can be very costly and time-consuming to fix, which could interfere with other projects you may be working on.

Furthermore, your property will be more appealing to buyers since they won’t have to foot the bill for structural repairs while the warranty is in effect. 

Lastly, most times, mortgage lenders also list it as a requirement. Without a builder’s warranty, potential buyers might not be able to buy your property no matter how much they love it since they cannot get a mortgage for your property. You might not even manage to get the fund to build, which is why it’s important to buy insurance that mortgage lenders have approved.

How Does a Builder’s Warranty Work?

Depending on the supplier, a Builders Warranty can be purchased at any time, sometimes even retrospectively. However, it is often bought early in the construction process, sometimes even before it starts.

The process starts with plan reviewing where the provider evaluates your building’s proposal and whether they are up to code. Following this, inspectors from your provider will schedule intermittent inspections at critical construction points including:

• When establishing the foundation

• Building the structure

• Installing the roof

• Just before plastering

If all goes as per the plan, your warranty will go into effect after the building is finished and approved. Your builder will then take care of all necessary repairs, including snags, for the first two years after construction is complete.

After the third year, your warranty provider will pay for structural repairs like roof replacements. This reassures your customers that they won’t be responsible for paying for these kinds of necessary repairs.

What is the Difference Between an Architect Certificate From a Builders Warranty?

An architect’s or professional consultant’s certificate attests to the supervision and compliance of a building to existing building codes. Terms can change, but they typically last for six years. They are typically more affordable than builders’ warranty insurance.

In case of any structural damages, though, you would have to demonstrate that the architect or other expert was negligent when certifying the building so that you can make a claim using the architect’s certificate. That’s why we recommend builder’s insurance.

Should Builders Provide a Warranty?

Yes, they should, but the provision of a Builders Warranty to customers is not mandated by law. Without one, however, your property will be much less appealing to buyers, and it can be challenging to get a mortgage to pay for it.

Additionally, not having a warranty puts you in a potentially precarious situation. Imagine if buyers contact you years after the sale with structural problems that you are responsible for. Fixing could cost you a lot, leading to serious losses. 

Does owner-construction require Builders’ Warranty Insurance?

If you are building anything yourself and want to stay in your home for a long time, you might wonder if you need a warranty. Well, yes you do. 

That’s because you might have trouble getting funding in the future. After all, so many mortgage lenders now demand that you have a builder’s warranty in place. Additionally, a lack of warranty could be a turn-off to potential buyers since they may need to secure mortgage financing which can be a challenge without a warranty. 

How Much Is Builders Warranty Insurance?

The cost of a warranty depends on several variables. For instance, it depends on the size and complexity of your development or construction. Projects that are bigger and more difficult will cost more money. Other factors that affect the cost include developer ratings, past claims history and credit rating.

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