Published: March 14, 2008 01:33 pm            

Q&A; with John Oxendine

Q: I’m purchasing a new home, and the builder is offering a homeowner’s warranty. What will this kind of warranty cover?



A: A new home warranty usually provides coverage for 10 years on the structure of the house. Sometimes the builder may back the policy, or it may be underwritten by an insurance company. Warranties can be purchased for existing homes too. Usually such a warranty will cover the furnace, appliances and air conditioning. The coverage period is typically one year.

Though it’s hardly light reading, going over the policy thoroughly is the only way to be sure what’s covered. If it’s a new home warranty, try to get a copy well before closing so you’ll have time to read it. If you have any questions, ask the closing attorney.

Perhaps even more important than what a warranty does cover is what it doesn’t cover. Exclusions should be spelled out clearly.

Find out how to file a claim, should the need arise. If there’s a dispute, how will it be handled? What are your rights as warranty holder?

If a builder provides the warranty, find out if you’ll have to deal directly with the builder with a claim, or go through a third party. Will you still have the right to sue? Some warranties specify binding arbitration in the event a problem arises, or may limit the liability of the builder.

If the warranty seems too restrictive, you can decline it.



Please send your insurance questions to:

Insurance Commissioner John Oxendine

716 West Tower

2 Martin Luther King Jr. Drive

Atlanta, Georgia 30334

Or call 404-656-2070 (toll free at 1-800-656-2298), from 8 a.m. to 7 p.m. weekdays, for assistance with an insurance question.

Website www.gainsurance.org

        

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