A homeowners policy generally doesn’t cover items for mechanical breakdown. For example say your hot water heater has an unexpected leak which in turn damages your carpets in your basement. Your homeowners policy would apply to the water damage caused by the water heater leak, but not the replacement of the hot water heater. Your home warranty would take care of replacing the hot water heater, but not the damage as a result of the leak. Home warranties fill an important gap in coverage that homeowners policies do not cover.

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