What’s the difference between an Insurance Policy and a Warranty?

What’s the difference between an Insurance Policy and a Warranty?

Sometimes in the Structural Insurance world, the two terms are interchangeable and typically used incorrectly such as ‘New Home Warranty’ vs ‘Latent Defect Insurance’ – but what actually is the difference?

There are two different sorts of financial protection: warranties and insurance.

A warranty is a promise made by a product’s maker or seller that the good or service will be up to par for a predetermined amount of time. The maker or seller will make the necessary repairs or replace the item free of charge if the good or service does not fulfil those requirements.

For instance, a guarantee that covers repairs for a specific number of years or miles travelled may be included with a new car. During the warranty period, if a problem with the car emerges, the manufacturer will fix it or replace it at no additional cost to the buyer.

Contrarily, insurance is a contract between the insured and an insurance provider under which the insurer agrees to cover financial losses brought on by certain occurrences, such as sickness, accidents, or property damage, in return for recurrent payments known as premiums.

For instance, car insurance pays for replacement or repairs to the vehicle in the event of an accident, and health insurance pays for medical care in the event of disease.

In conclusion, insurance is a contract between the insured and an insurance company that covers financial losses brought on by specified occurrences, whereas a warranty is an assurance from the manufacturer or seller that a product or service will satisfy certain criteria.

Compariqo can assist with all your construction insurance and warranty needs, get in touch today to discuss your next project.