New Home Warranty

There are differences between a guarantee and a warranty, but both words are often used with regard to a new home warranty.

The AskOxford website defines them as:

Warranty: 1) a written guarantee promising to repair or replace an article if necessary within a specific period. 2) an engagement by an insured party that certain statements are true or certain conditions shall be fulfilled.

Guarantee: 1) a formal assurance that certain conditions will be fulfilled, especially that a product will be of a specified quality. 2) something that makes an outcome certain.

A new home building warranty, is in essence an insurance policy paid for by the builder, to provide cover against any latent defects that may occur in the new home. The fee also includes the cost of inspections during specific stages of the construction of the home.

The NHBC Buildmark warranty offers three-part protection:*

Before the house is completed
(Claims paid by NHBC in the year 2004/5 - �700,000)
You are covered against the builder becoming insolvent. The policy will reimburse home buyers for loss of deposit after exchange of contracts or other financial loss which cannot be recovered such as valuation fees. The policy will also pay for the property to be finished to NHBC standards.

During the first two years
(Claims paid by NHBC in the year 2004/5 - �9.7 million)
This cover requires the builder to remedy at his own expense, any defects or faults which arise as a result of his not adhering to the NHBC standards for materials and/or workmanship. However, it is usually found that most house builders will undertake to rectify all defects, with certain exceptions such as shrinkage cracking, during the initial two year period, even though they may not be a result of NHBC standards not being followed. However once the two year period has expired, it is very rare for a house builder to attend to defects that were not reported within the two year period.

Years three to ten
(Claims paid by NHBC in the year 2004/5 - �24.7 million)
Insurance cover against major damage arising from structural defects or drainage defects resulting from a failure to comply with the NHBC technical standards. The Buildmark cover protects you against subsidence, settlement and heave (unless they are covered by your Buildings insurance) along with other structural defects causing damage. This cover is up to the maximum stated in the policy documents and applies to the cost of rectifying physical damage caused by defects in specific building elements such as foundations and load bearing walls.

The NHBC*

A leading new home warranty and insurance provider. Established over 70 years ago as a non-profit organisation. The NHBC primary purpose is to raise standards in the new home building industry and provide consumer protection for new home buyers.

The NHBC has over 19,500 registered builders, who undertake to adhere to strict NHBC technical standards. Around 85% of all new homes are registered with the NHBC for Buildmark warranty. Last year of the 7382 complaints received, the NHBC found 70% in favour of the homeowner.*

The NHBC helps raise standards by-

w	registering builders who agree to comply with NHBC Rules and Standards.

w	setting and maintaining construction standards for new homes

w	inspecting at key stages of construction

w	providing �Buildmark� warranty and insurance cover.

w	offering Building Control services in England and Wales.

w	providing a range of services, including technical information, training, health and safety.

w	engineering and energy rating services for new homes and housing related sectors.

The 350 inspectors employed by the NHBC, made over a million individual inspections of new homes last year. These are made at critical stages of construction before the next stage is started. The inspection stages are:

�	Foundations: once excavated (before concrete)

�	Drainage :- if NHBC is also carrying out Building Control services

�	Superstructure :- :the brickwork, blockwork, floors and roof

�	First fix :- before plastering or drylining

�	Pre-handover : - final (CML) inspection

(* source NHBC website.)

For more about the NHBC and the work it does setting building standards click

Zurich Municipal
This provides a comparable warranty to that of the NHBC but is not so widely offered, especially by the larger house builders. Click for more details.