Olga

There are definite differences between warranties on new homes and those on existing homes. And it's important for a homeowner to understand what's covered, so there's no surprise if a claim is denied.

Most builders will provide a warranty on a newly built house. Typically, homeowners receive a one-year warranty covering workmanship and materials, which include siding, stucco, doors, trim, drywall and paint. Coverage for plumbing, HVAC and electrical systems is generally two years. Some builders offer up to a 10-year structural warranty, covering problems that could make the home unsafe, such as a roof that might collapse. Appliances aren't covered by a builders' warranty, as presumably they come with their own warranty options.

The builder could offer the warranty directly or sometimes will pay a third-party warranty company to handle the coverage. The Federal Housing Authority and the Department of Veterans Affairs require builders to buy a third-party warranty as a way to protect buyers of newly built homes bought with FHA or VA loans.

Coverage on an existing home tends to be in one-year increments, and is less comprehensive than coverage on a new build. Warranties on existing homes are tiered, with the basic level covering the mechanical systems, such as plumbing, HVAC, range/oven, dishwasher, garbage disposal and water heater. For an additional fee, you can get a warranty with enhanced coverage, to cover items such as a pool, garage door opener or septic system.

The average cost of a basic coverage plan can range from $350 to $500 a year, with each service call typically requiring an additional fee of $50 to $100, which the homeowner pays. When a homeowner makes a repair request, the home warranty company dispatches an appropriate service professional from their network of contractors to address the issue.

It's important to read the details of what a home warranty covers. One of the biggest misconceptions homeowners have is assuming that their warranty covers items in a way similar to homeowner's insurance. But typically, there's not a dollar-for-dollar replacement for a claim.

Also, be sure your understand what maintenance is required for your systems to remain covered and how much you'll have to pay out of pocket if you need to replace something.