There are several differences between home warranties and home insurance. A home warranty is a service contract that covers repairs or replacements of household systems and appliances that break down from routine use. People occasionally refer to a home warranty as “home appliance insurance,” but this is somewhat of a misnomer; even the best home insurance policies won’t pay to repair or replace appliances if the damage is caused by wear and tear — that’s what a warranty is for. Homeowners insurance covers structural damage to your home and loss of your property caused by lightning, fire, smoke, hail, vandalism, theft and other perils. It also covers the policyholder’s liability if they are responsible for an injury on the property. Unlike homeowners insurance, a warranty does not cover damages caused by these events; it only covers breakdowns resulting from normal use. If you have a mortgage, homeowners insurance is likely required. A warranty is not mandatory for homeowners, but it helps pay for expensive home repairs.