Difference Between Warranty & Insurance

There is a difference between a warranty and insurance.

Both insurance and warranties are designed to help the consumer in an event where they suffer loss and/or damages to themselves or their belongings. Although both are designed to help a consumer recover loss, they are two very different forms of coverage.

Warranty

A home warranty is classified as a contract, not a policy. Because a warranty is a contract, it is intended to offer repairs and replacements for your covered piece of property that fails due to normal wear and tear. Normal wear and tear includes a home air-conditioning system that stops working and needs to be replaced or a car radiator that needs replacing while the car is under warranty.

Insurance

Insurance is classified as a policy and not a contract. Insurance provides a person with coverage on their property in the case of natural, unnatural and accidental hazards that may happen that destroys or damages the covered piece of property. Hazards include a flood that may damage a home basement or a car accident that totals a covered automobile.

Purchase Insurance And A Warranty

It is important to purchase both a warranty and insurance for your property because they cover different things. A warranty insures that maintenance will be covered for normal wear and tear while insurance provides you the comfort of knowing your property will be replaced or repaired if damaged.

References

• Liberty Home Protection: Warranty vs. Insurance
• Federal Trade Commission: A Businessperson's Guide to Federal Warranty Law
• Colorado Springs Audiology: The Difference Between Insurance And Warranty

Resources

• Home Insurance: What is the Difference Between Home Insurance and a Home Warranty?