One of the biggest misconceptions in the insurance industry is that warranties are insurance, or vice versa. In reality, understanding their differences is incredibly important for navigating what your warranty or insurance policy cover—and what they don’t cover as well.

So, what exactly is the difference between a warranty and insurance? Whether it’s for your home or car, the answer remains the same.

What is a Warranty?

A warranty is a guarantee of the performance of a product. It covers issues and events that are likely to happen over the course of your product’s lifecycle—typically the breakdown of functionality over time. It may also cover poor workmanship, such as if a furnace is improperly installed and therefore runs its lifespan at an accelerated rate.

In essence, a warranty is a service contract that guarantees the repair or replacement of key items in exchange for a set premium and known deductible. However, the items must be properly maintained in order to qualify for warranty coverage.

Because they cover expenses and events that are likely to occur in your product’s lifetime, warranties are a common safeguard for homes and cars.

Home warranties may cover:

  • Major systems in your home such as heating, plumbing, A/C and electrical
  • Major appliances such as the refrigerator, stove, water heater, washer/dryer, cooktop and dishwasher
  • Some may include roof coverage, but this is generally for leak repair only and does not provide replacement of the roof

While car warranties may cover:

  • All major vehicle systems (A/C, heat, etc.)
  • Powertrain – engine and transmission
  • Some provide coverage for corrosion (damage caused by rust)
  • Defective materials or workmanship

What is Insurance?

Insurance, on the other hand, does not cover the typical wear and tear of key products as they age. Instead, insurance covers unexpected damages, such as storm damage or fire, that are considered emergency events. Because warranties and insurance do not cover the same types of damages or events, it’s crucial to understand your specific home or car needs in order to determine whether you require both types of coverage.

Don’t Go It Alone

The team at Rally is specialized in providing personalized insurance services to our clients, helping them understand their policies and coverage so that they can rest assured their home and car are protected. Reach out to Rally today to schedule a meeting and find the right warranty and insurance coverage for you.


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