Is a residential structural warranty worth the paper it’s written on?

Update 7-13-2015: Most importantly, it appears that my former clients’ claim (part of porch/foundation pulling away after 9 years of the 10 years of coverage) filed with a structural warranty company has been approved awaiting estimates. But it is still a little unclear as to the extent of repair and further coverage of that repair….so stay tuned.

Other updates on 7-13-2015: update to structural warranty

Structural defect = actual physical damage to the designated load-bearing portions of a home caused by failure of such load-bearing portions that affects their load-bearing functions to the extent that the home becomes unsafe, unsanitary, or otherwise unlivable. Load-bearing components for the purpose of defining structural defects are defined as follows: Footing and foundation systems; beams; girders; lintels; columns; load-bearing walls and partitions; roof framing systems; and floor systems, including basement slabs in homes constructed in designated areas (see §203.207) containing expansive or collapsible soils. Damage to the following non load-bearing portions of the home is not considered a structural defect: Roofing; drywall and plaster; exterior siding; brick, stone, or stucco veneer; floor covering material; wall tile and other wall coverings; non load-bearing walls and partitions; concrete floors in attached garages; electrical; plumbing, heating, cooling and ventilation systems; appliances, fixtures and items of equipment; paint; doors and windows; trim, cabinets, hardware, and insulation.

Repair of a structural defect is limited to:

(1) The repair of damage to designated load-bearing portions of the home which is necessary to restore their load-bearing ability;

(2) The repair of designated non-load-bearing portions, items or systems of the home, damaged by the structural defect, which make the home unsafe, unsanitary or otherwise unlivable (such as the repair of inoperable windows, doors and the restoration of functionality of damaged electrical, plumbing, heating, cooling, and ventilating systems); and

(3) The repair and cosmetic correction of only those surfaces, finishes and coverings, original with the home, damaged by the structural defect, or which require removal and replacement attendant to repair of the structural defect, or to repair other damage directly attributable to the structural defect. It is the intent of this section to ensure the repair of a covered home to a condition approximately the condition just prior to the defect, not to a like new condition. It does not require refinishing of all interior or exterior surfaces if only one or two surfaces are damaged. It does not cover personal property items, not a part of the structure, which are damaged by the defect or as a result of the defect. It excludes damage covered by a homeowner’s casualty insurance policy.

Designated load bearing elements:

1. Footings and Foundation systems;
2. Beams;
3. Girders;
4. Lintels;
5. Columns;
6. Walls and partitions;
7. Roof framing systems; and
8. Floor systems

Those elements that aren’t covered:

1. Non-load-bearing partitions and walls;
2. Wall tile or paper, etc.;
3. Plaster, laths, or drywall;
4. Flooring and sub-flooring material;
5. Brick, stucco, stone or veneer;
6. Any type of exterior siding;
7. Roof shingles, roof tiles, sheathing, and tar paper;
8. Heating, cooling, ventilating, plumbing, electrical and mechanical systems;
9. Appliances, fixtures or items of equipment;
10. Doors, trim, cabinets, hardware,
11. Basement and other interior floating, ground-supported concrete slabs.

Source: http://www.ecfr.gov/cgi-bin/text-idx?SID=b0ffd78a1c0a1cacd20bf584e93c4e6a&mc=true&node=se24.2.203_1200&rgn=div8

This type of warranty may be provided but mostly purchased by a home builder (who may eventually go out of business leaving you alone to face the issues) to provide the appearance of peace of mind that there is someone to “fix” any structural/foundation issues in your home should they occur.

Now, there may be times when a foundation structure suddenly fails or explodes on a whim, but almost all other occurrences are usually not covered by them – or are they?

I’ve reviewed one structural warranty and man – you should see all the exclusions for this, that, and the other thing…

So, to answer the question, “it all depends” on the cause – and without detailed analysis to prove your side, the warranty probably doesn’t cover 95% of the times…

Just a guess though – could be more or less….

Since a residential structural warranty is an “insurance policy against certain structural deficiencies or problems” and requires State Insurance Commissioner’s approval to provide such a policy in your state, I suggest you consult with your State’s Office of Insurance Commissioner regarding the matter. They may have a consumer advocate who helps you understand the applicable coverage and works toward a resolution between you and the Warranty provider.

Note: I know of one former client who will be testing the integrity of his structural warranty real soon…stand by for the results and level of coverage….

Source for inspiration of post and a more detailed analysis of proposed coverage: Review of a Structural Home Warranty.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

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