When it comes to protecting your community's investments, understanding your warranty and its coverage is crucial. Warranties provide peace of mind, ensuring that you are covered in the event of material defects or workmanship issues. But without proper knowledge of the ins and outs of your warranty, you could be left paying out of pocket.
Labor and Material Warranties
Warranties are categorized as either labor or material. A labor warranty, also referred to as workmanship, covers any failure of the product due to improper installation by the contractor. For instance, if a roof was not installed according to industry standards and began to leak, this would be covered under the workmanship warranty – if the issue was discovered within the warranty timeframe.
A material warranty covers the products used during installation. This is often provided by the product manufacturer. If the material itself is found faulty within the specified timeframe, it would be covered under the warranty.
However, it’s essential to know the terms and conditions under the manufacturer’s warranty. It often specifies what materials must be used and the installation process. If these specific instructions were not followed by the contractor, the manufacturer’s warranty could be void. The association should be familiar with these terms to ensure the proper process is followed for warranty coverage.
Types of Warranties
No Dollar Limit (NDL) Warranty
An NDL warranty covers 100% of replacement costs throughout the entire warranty period. This means that if your roof or other building component fails at any point within the warranty period, the manufacturer or contractor will cover the full cost of repairs or replacement.
Benefits of NDL Warranties:
- Comprehensive Coverage: NDL warranties provide complete protection, covering all repair or replacement costs.
- No Financial Cap: There is no limit to the amount the warranty will cover, ensuring full financial protection.
- Reserve Savings: With an NDL warranty, you know 100% of costs will be covered under the warranty. This simplifies your annual reserve funding for that building component, while saving you money in the long run.
Prorated Warranty
A prorated warranty, on the other hand, offers decreasing coverage over time. Initially, the warranty may cover a significant portion of the repair or replacement costs. But as the warranty period progresses, the coverage percentage decreases, leaving you responsible for a larger share of the costs.
Characteristics of Prorated Warranties:
- Decreasing Coverage: Coverage diminishes overtime, meaning the older your roof gets, the less coverage you receive.
- Financial Cap: Prorated warranties often come with a cap on the maximum amount covered, which can be significantly lower than the full replacement cost.
- Cost Sharing: As time goes on, you will be responsible for more of the repair or replacement costs.
Warranty Exclusions
Every warranty comes with exclusions. The most common include:
Structural failures not pertaining to the area of work
If you recently completed a stucco repair project, any leaks stemming from the stucco work would be covered under warranty. If, however, the cause of the leak was a faulty window, this is not covered under the contractor’s scope of work and would therefore not be covered under warranty.
Proper installation and waterproofing of a particular building component can sometimes reveal other areas of issue. Water is always looking for a way inside of your buildings. So once one area is properly sealed, water will travel until it finds another faulty area.
Work completed by other contractors on or around the warrantied area
A contractor cannot warranty the work of another company because they were not involved in the process. They are also not responsible for any damage due to another contractor’s work on the same building. So, for instance, if another contractor broke tiles while walking on your roof, that damage is not covered under warranty.
Failure to complete proper maintenance
Any work completed on your building is done under the assumption that the association will keep up with proper maintenance protocols. Just like you’re required to complete preventative maintenance to protect your car warranty, this is also a necessity for your labor and material warranties. Your roof should be kept clean, landscaping should be kept a proper distance away from structures and you should complete regular property inspections once to twice a year. Learn more about simple preventative maintenance steps in a recent blog from our sister company.
Hurricanes and other natural disasters
While a common occurrence here in Florida, hurricane scan void your warranty. If proper steps are not taken following the storm, you could be left without coverage. This often includes an inspection by the contractor who completed the work. They will assess the damage and correct any storm-related issues, at the cost of the association. Once this is completed, they can reinstate your warranty.
Note that while it may not be covered under warranty, hurricane damage may be covered under an insurance claim. Contact your insurance provider to learn more about your coverage.
Understanding your warranty coverage is essential to protecting your investment. If you need guidance or assistance with warranty-related matters, reach out to us! We are here to help you navigate the ins and outs of warranties and ensure your community is well-protected.
