What Is a 2-5-10 Home Warranty?
When buying a new home, it’s a good idea to invest in a home warranty. The home warranty is different from home insurance. Home warranty policies typically last for one year and cover all the major systems and appliances in the home under normal wear and tear.
There are different types of home warranty policies, and it’s important to pick the best one for you. The 2-5-10 home warranty differs slightly from traditional home warranties most companies offer, but it still provides additional coverage and peace of mind for new homeowners.
What is a 2-5-10 home warranty?
A 2-5-10 home warranty typically covers certain construction defects for a certain period. The numbers in the policy refer to the number of years these defects are covered. The defects may be problems with material or labor.
These warranty programs are used specifically for new construction properties. If you’re building a new property or purchasing a house built in the last ten years, this warranty program may be best for you. It usually covers defects and failures in material or labor for plumbing, heating, air conditioning, ventilation, and electrical systems for two years minus a day. Building code violations and defects that make the house unsafe are typically covered for two years.
Keep in mind that there are provisions in the policy. For instance, during the first 12 months of coverage, detached homes may be covered inside and out, including all appliances, finishes, hardware, and paint.
The warranty typically covers building defects like water leakage, foundation damage, basement defects, roofing, and exterior walls, doors, and windows for five years. Ten years of coverage includes major structural defects only, such as a sinking footing or collapse in your home.
Unlike traditional home warranties, the 2-5-10 usually does not cover systems or appliances that fail due to normal wear and tear. It is generally considered a builder’s warranty, while traditional home warranty policies can be used on new construction or existing properties.
Benefits of a 2-5-10 home warranty
Like other types of home warranties, the most important thing 2-5-10 offers is peace of mind for new homeowners. After all, you don’t want to invest so much time and money into building the home of your dreams only to get stuck with a major repair bill down the line.
A good home builder has liability insurance for any issues on the job site, but the policy helps fill the gaps. Some major structural issues, like a problem with the foundation, may take a few years to present themselves. You can usually still get coverage for that issue even if you haven’t worked with the builder in almost a decade.
Ultimately, investing in coverage for a new construction property now could save you thousands of dollars later. You likely won’t be held responsible for problems with housing materials or mistakes made by workers during the building process.
How to get a 2-5-10 home warranty
The 2-5-10 home warranty is available to homeowners who are building a new property or homebuyers who purchased a house built in the last ten years. This type of policy is specifically designed to protect new construction home buyers.
If you buy an existing new construction home that is covered under this home warranty, the coverage typically remains with the house until the coverage expires. So, if you buy a property that’s three years old, you still have coverage for the items protected for up to five years and up to 10 years.
For single-detached dwellings, coverage typically begins on the date of first occupancy, the date of an occupancy permit, or the date the home was completed and ready for occupants. Spec homes are usually covered from the date of first occupancy or the date of legal title transfer to the homeowner.
These home warranties can also cover new construction condos called strata homes. Strata home coverage generally begins on the date of first occupancy or transfer of title to the first owner. Common property, which would be the whole building, is covered from the date of first unit occupancy or transfer of legal title.
Pay attention to which kind of property you’re buying and the date your specific property will be covered.
Purchasing the policy
You’ll need to buy your policy from a separate 2-5-10 home warranty provider. You must purchase a qualifying home, and there are a few exemptions. Homes built by owner builders, non-stratified motels, hotels, dorms, and manufactured homes that haven’t been significantly changed or added onto are not included.
Read through the policy carefully to understand what is covered and for how long.
Factors to consider when selecting a provider
If you’re building a home, ask your builder who they recommend. They may have a dependable warranty provider they’ve worked with before. Make sure to read customer reviews as well to get a real-time idea of what it’s like to work with that home warranty company.
When deciding what to look for in a home warranty, your Realtor can be a useful guide for different service providers. Ask them for their recommendations as well.
Frequently Asked Questions
Q: What exactly is covered under the 2-5-10 home warranty?
Typically, construction defects in materials and labor are covered for two years. This may include any issues with the electrical, plumbing, heating, ventilation, and air conditioning delivery systems.
Strata properties, detached homes, and strata unit interior areas are usually covered for the first 12 months. Common areas used by multiple residents are usually covered for the first 15 months.
Five years from the date of first occupancy or legal transfer of property, you’ll typically have coverage on building envelope defects. This includes water leaks and problems with the basement, foundation, roof, exterior walls, windows, and doors due to labor or material defects. Traditional home warranties do not cover the roof, windows, or doors, which is a unique advantage. Once you get to ten years, you’ll have coverage for major structural defects.
Q: What major systems are not covered by the 2-5-10?
If your home is being used for non-residential purposes, you probably won’t be covered. So if you’re building a property you intend to use as an Airbnb, you’ll have to find other coverage.
For strata properties, there are a few major systems that don’t fall under the 2-5-10:
Septic systems
Landscaping
Site drainage
Municipal services
Shrinkage of construction materials
Animal damage
Normal wear and tear (this is covered under standard home warranties)
Commercial use areas
Roads, curbs, and sidewalks
Q: How do I file a claim under the 2-5-10 home warranty?
First, you must report the defect in writing to your builder, as well as the insurance company that provides the warranty. Take as many pictures as possible of the area where the defect is. The more details you provide in your description of the problem, the better.
Your report should include a cover letter with your address, warranty policy number, strata plan number, and the list of damages and defects. Include a copy of the warranty certificate, an inspection report (if available), and copies of any communication you might’ve had with the builder or insurance company already about the defects.
Q: Do I need to hire a home inspector to file a claim?
You don’t need to, but it’s highly recommended. Before each coverage period ends, call a home inspector to walk through your property. That way, they can catch any defects while the 2-5-10 home warranty still covers you, and you’ll be more likely to get some help paying for the repairs and replacements.
The more proactive you are, the more use you’ll get out of the policy. This type of warranty was designed to protect new construction homeowners beyond a traditional home warranty. Even the most experienced builder can make a mistake or use faulty materials thanks to a supply chain issue.
Q: If I have the 2-5-10 warranty, do I need a traditional home warranty?
Ultimately, it’s up to you, but it can’t hurt to have additional coverage. Standard home warranties generally cover major systems and sometimes large appliances in the home for up to one or two years. They also cover damages and repairs caused by normal wear and tear.
This policy will cover any defects caused by labor or materials used during the building process for a certain number of years.
Ask your builder for a recommendation, thoroughly read and understand your policy, and connect with a home inspector to come out and look things over before coverage ends. That way, your biggest investment — your home — will stay in good shape over the next two, five, and ten years.
And, as long as you make those timely repairs, you can enjoy your property even longer.
If you are a homeowner or are planning to buy a home, consider adding a home warranty to your to-do list. It’s a financial safety net that can shield you from unforeseen expenses related to your home’s systems and components.
