What is the difference between an insurance policy and a warranty?

An insurance policy and a warranty both provide protection for certain types of risks, but they are very different. An insurance policy is a contract between a policyholder and an insurer. The policyholder pays a fee, or premium, in exchange for the insurer to cover certain types of risks. For example, someone may purchase health insurance to cover medical expenses or car insurance to cover damage to a vehicle due to an accident. A warranty is a guarantee made by a manufacturer or seller that a product meets certain expectations. A warranty is a promise that the product is free from defects or will be replaced or repaired if it does not perform as promised. Warranties typically offer protection from mechanical breakdowns, defects in materials, and performance issues. In summary, a warranty protects against a product not performing as expected whereas an insurance policy protects against certain types of risks. Insurance can cover tangible losses, such as damage to a property, and intangible losses, such as medical bills, while warranties only cover tangible losses. In Minnesota, insurance policies are regulated by the state government and warranties are enforced by the manufacturer or seller.

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What is the difference between an insurance policy and a warranty?

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