Effective July 1, 2025, Florida Statute §553.837 imposes a mandatory one-year warranty on all newly constructed residential homes, including single-family dwellings, duplexes, triplexes, quadruplexes, and modular or factory-built units that have never previously been occupied. This statutory requirement establishes a robust baseline of guarantees for homeowners but also introduces new exposures for builders that typical Commercial General Liability (CGL) policies may not fully address.
Scope and Obligations Under the Statute
The statute mandates that builders warrant against construction defects in equipment, materials, or workmanship that result in a material violation of the Florida Building Code. A "material" violation refers to a code infraction that may result in physical harm to individuals or significant impairment to a building's systems.
The coverage period spans one year from either the date of the original title conveyance to the first owner or the date of initial occupancy, whichever occurs first, and transfers to any subsequent owner within that first year. Builders must remedy such defects and restore any work damaged during the remediation. Alternatively, builders may satisfy their obligations by securing an approved warranty from a home warranty association.
Builders may exceed these statutory minimums by offering express written warranties that match or improve upon the baseline. To qualify, express warranties must automatically transfer within the initial year and, if they extend beyond one year, explicitly state their duration and transferability conditions.
Exclusions from warranty coverage include:
- Appliances or equipment already covered by manufacturer warranties.
- Normal wear and tear or typical house settling.
- Defects caused by work or materials provided by any purchaser, owner, or third party unrelated to the builder.
- Loss or damage resulting from acts of God, third-party actions, or other uncontrollable factors.
Enforcement is limited to a private cause of action by a purchaser and does not modify or extend the existing statute of repose.
Insurance Implications and Coverage Gaps
Despite the new liability framework, standard CGL policies remain unchanged in scope. CGL coverage typically covers bodily injury or property damage arising from an "occurrence," subject to the policy's terms and exclusions. A key challenge is that many statutory warranty claims do not constitute "occurrences" under CGL policies and therefore, may not be covered. Courts in Florida have occasionally allowed claims when defective workmanship damages other property, but reliance on such interpretations is limited and inconsistent.
Strategic Considerations for Builders and Risk Professionals
- Builders and risk managers should assess definitions of "occurrence," "property damage," and other contractual liability language to understand where coverage may fall short.
- Consider designing custom policy endorsements that align with statutory obligations can help bridge gaps and prevent potential litigation.
- Indemnity or express warranty provisions should be incorporated into subcontractor and supplier agreements to ensure liability flows downward appropriately.
- Where possible craft warranties that meet or exceed statutory requirements, including clear transferability features and explicit terms for extended coverage, to mitigate risk and create consistency.
- Partnering closely with legal and insurance advisors is critical for both compliance and optimal risk allocation across contracts, warranties, and insurance arrangements.
Conclusion
Florida's new builder warranty law delivers tangible consumer protection but simultaneously triggers unanticipated exposures for construction professionals. While most warranty-only claims will not trigger CGL coverage, builders can proactively manage risk through precise contractual drafting, supplemental insurance solutions, and consultation with legal counsel. Builders, insurers, developers, and risk advisors must acknowledge the evolving landscape by updating contracts, assessing insurance coverage, and refining warranty strategies to ensure resilience under Florida Statute §553.837.
