What’s the difference between a building warranty and home insurance?
Both building warranties and home insurance protect the owner’s bank account against costly repairs, but what’s the difference in their coverage? Do you really need both at the same time?
It’s understandable to want to save money by only buying the best insurance product, but you won’t be covering all the bases if you choose one over the other. Let’s look into what these policies are and why investing in both a building warranty and home insurance offers the best financial protection.
A building warranty, structural warranty, or home warranty is a type of insurance policy taken out on a new build. The developer or builder responsible for the project usually sets up the warranty before construction starts, then transfers the policy to the new owner when they buy the property.
This is also known as latent defects insurance, because it protects the policyholder against latent structural defects. In the several years after the build is completed and settles, problems with the structure might develop, caused by defective design, materials, or workmanship during construction.
The structural warranty should cover the expense of repairs or replacement materials, giving the property owner peace of mind that they won’t be out of pocket for a problem that wasn’t their fault. These warranties can apply to new build homes, commercial properties, self-builds, and more.
Whereas the property developer is initially responsible for a building warranty, it’s the responsibility of the buyer to ensure they have personal insurance for their new residence or business insurance for their new premises. Home insurance covers your property against other types of damage to the building and your belongings, which the latent defects warranty doesn’t as a structure-only policy.
This includes events like vandalism and theft, fire and smoke, and weather damage (e.g. flooding from heavy rain or falling trees from high winds). You can purchase separate policies for building insurance (applying to the building itself) or contents insurance (applying to your possessions only), or opt for an inclusive home insurance policy that rolls both types of coverage into one contract.
Home insurance may also cover you for legal expenses in the case of a third-party injury claim on your property. Standard coverage will normally exclude circumstances like extreme natural disasters.
As you can see, these insurance types cover different risks, so you’ll be leaving yourself open to more liabilities if you only have one of them and not the other. If you would prefer full protection for damage to the structure, the building as a whole, and everything inside it, then you’ll need both.
If that isn’t reason enough, financial lenders will also expect you to have a structural warranty and home insurance set up before you apply for a mortgage. Since they’ll be paying for part of the property upfront, mortgage providers are unlikely to take the risk on an unprotected investment.
If you’re in need of a structural warranty for any type of building project, why not contact Architects Certificate to get a no-obligation quote? We may not provide home insurance here, but we do offer bespoke building warranties, so call us on 01619 288 804 or email firstname.lastname@example.org.