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Offering Warranties for Contracting Work: Product, Installation, and Full Warranties

FieldPulse | January 12, 2017

contractor warranty

As a contractor, you may be called upon to perform countless installations or repairs over the course of a year. Whether these installations are for residential or commercial properties, you may agree to offer an installation warranty.

A warranty both guarantees the quality of the work and gives you an opportunity to make any corrections in your work down the road. If presented appropriately and fairly written, a warranty can provide a win-win for both the contractor and the client. The client has the advantage of calling out errors in the work and having them corrected without additional charge (according to the warranty agreement, of course). The contractor has an opportunity to demonstrate impeccable customer service, trustworthiness, and a reputation as a service provider that truly takes care of your clients.

Installation Warranties vs. Manufacturer’s Warranties

When it comes to warranties, there’s a significant difference between guaranteeing the quality of work and the durability/performance of the products.

A manufacturer’s ability to backup their products is determined in part by how well the materials were installed. For this reason, most manufacturers require that contractors become certified to use their particular line of construction products. They often provide their certification classes. Keep in mind; these are not state mandates, but rather manufacturer’s certifications. They’re designed to ensure contractors install and use their products according to exact specifications.

Installation warranties cover what happens once the products arrive on the property owner’s doorstep. Your job is to take it from there and ensure that the work is done to the highest standards. There often three entities that you must consider when drafting a warranty.

  •      Manufacturer’s Specifications
  •      Client’s Expectations
  •      Federal, State, and Local Building Codes

Your warranty should fall under all of these parameters. What guidelines does the manufacturer give for using the products? What does the client expect the project to look like upon completion? Is the job completed according to the regulations of all governing agencies?

Installation Warranties and State Laws

Most states require that contractors provide warranties against errors in the implementation of all materials and products. Although the requirements differ from state to state and project to project, most contractors are required to carry a one year warranty of all their work.

By law, if the owner discovers a defect in the installation, they first contact the contractor. If the contractor fails to satisfy the client, they can file a legal complaint. The claim is filed in either a civil court or a small claims court. The homeowner must take care of all personal legal expenses incurred during the proceedings. Most states of have third-party agencies such as licensing boards that can be called upon to perform inspections to settle disputes.

It is a good idea to review the consumer laws in your state to see how they apply to contractors. In many states, contractors often establish laws to protect consumers from negligent or criminal activity. The good news is that regardless of the laws set in place, contractors cannot be blamed for any product defects that are not associated with installation. Manufacturers are responsible for the quality of their products. Homeowners will direct their complaints directly to those companies without involving the contractor.

What Should Your Warranty Cover?

Material Only

A warranty that only covers material has a reduced cost compared to a full warranty (which covers the entire system), but only covers manufacturing defects and poor product performance over a short period. It is possible to include a manufacturing warranty as a part of your contractor’s warranty if the manufacturer certifies you and is willing to take on responsibility for the quality of the products. In most cases, material warranties only cover major components such as roofing membranes or asphalt shingles. It does not include accessories that are used to complete the project. Material warranties do not cover installation costs – only materials.

Labor-Only Warranty

A labor-only warranty will cover all work performed on the property except for the materials (unless otherwise specified). It includes all direct labor and any labor that is related to the project. Something you will want to specify in the warranty is whether or not the warranty will cover work completed by someone else once the initial project is completed and under what conditions. Many homeowners will often hire someone else to perform repairs or maintenance down the road. They may find the work to be sub-par and look to you for answers. The warranty can keep these issues from haunting you in the future.

A Full-System Warranty

Simply put, a full-system warranty covers everything. This includes all primary materials, additional accessories, the full cost of construction, labor, workmanship, and the possibility of repairs or maintenance down the road. When developing a full-system warranty, keep in mind the rising costs of both labor and materials down the road and how it can affect your bottom line with this type of warranty. You’ll also want to decide and clearly lay out what the warranty covers and what it will not. Full-system warranties can be misleading just by the name only.

The Importance of Communication

Warranties are like contracts. There’s always fine print, or in some cases, print that was missed or ignored by the homeowners. Before you launch your construction project, it’s important to sit down and go over all the details of your installation warranty. While it’s important to have a thorough description of the coverage, you don’t want it to be misleading or hidden from the customer in any way. Since warranties can make or break a contractor’s reputation, your client’s thorough understanding of what the warranty covers is paramount before moving forward to the next phase of the job. Review it with the customer and have them sign that they understand the coverage of the warranty. They will often perceive your level of honesty and integrity based on how well all paperwork was communicated. Setting expectations upfront and clearly will help ensure the best possible customer experience.

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