A home warranty is comparable to an insurance policy that protects the systems and appliances in your home. It is a service contract that pays for repairing or replacing specified home appliances and equipment if they get damaged or cease to function properly. This is not the same as homeowners insurance, even though people think that the two are interchangeable. In the event of a natural disaster, homeowners insurance protects the physical structure of your home and your items. On the other hand, a home warranty protects your home's systems and appliances if they sustain damage due to normal use and tear.