What Is New for Old Cover?

Many people assume that when they make a Home Insurance claim they will be covered for the cost of replacing stolen, damaged or lost items with the new equivalents.Furnished or Unfurnished

While this certainly might be the case, it isn’t always. Every year, thousands of people are disappointed to find that the terms of their cover mean they only receive a pay out after the age of items and wear and tear have been taken into account.

What ‘new for old’ means

The better Home Insurance policies that are available provide the peace of mind ‘new for old’ cover brings.

‘New for old’ ensures that when you’re claiming on an item (although not necessarily all items) you will be compensated sufficiently to exchange it for the exact same, new version; or, if that no longer available, the latest equivalent.

Indemnity or ‘wear and tear’ cover

The alternative is to opt for indemnity insurance, commonly known as ‘wear and tear’ cover.

Indemnity cover is generally the cheaper option as the insurer will only cover you for the item in the condition it was in. So if you’re attempting to replace a vintage guitar which cost you £1,000 five years ago, but which now would be worth £1,500, you would only receive one worth £1,000.

Likewise, if you damaged a five year old sofa, you would receive compensation for the same or a similar sofa which is five years old.
In other words, wear and tear is taken into consideration.

Pros and cons

For Home Insurance which offers wear and tear cover, you will generally pay less for your premiums than with a policy based on new for old. If you don’t care a great deal about your possessions, or value them at all highly, this could be the option for you.

However, most people generally prefer new for old, for the obvious reasons: You may pay a little more, but receiving the new, or exact equivalent, for something such as an item of jewellery or expensive cooker is preferable to most people, and won’t leave you potentially out of pocket when you get a replacement.

What new for old policies won’t cover

There are usually only a few items new for old policies won’t include compensation for.

The items tend to be less robust and easily ruined or lost, such as clothes and bed linen. Policies vary in this regard so always check the small print carefully.

Policy Expert
Policy Expert is an online Home Insurance broker, dedicated to helping customers find the insurance policy that’s right for them. Our customers are at the heart of everything we do, so we have a team of experts with a real passion for making sure people get the cover that’s right for them. Policy Expert is driven by a desire to help you find not only the best value insurance, but the right insurance for your individual needs. To speak to one of our experts, call 0203 014 9300 or email ask@policyexpert.co.uk

About James
James is a journalist and digital editor with over 13 years’ experience writing and editing for media and finance businesses. He specialises in personal finance and economics, but also covers property, travel and news.

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