New for old contents insurance

What is new for old insurance?

New for old insurance is a type of contents insurance that covers the belongings in your home from loss, accidental damage and theft.

This type of contents cover will replace your possessions with like-for-like new ones when you make a valid claim, no matter what age or condition they were in before.

For example, if your five-year old TV were stolen in a burglary your insurer would help you to replace it with a similar brand-new model, rather than simply giving you the amount the old one was worth at the time of the theft.

Pros and cons

The advantage of new for old contents insurance is that it can give you peace of mind – it could be very costly to replace items, especially if several have been stolen or damaged at the same time. This type of cover provides new replacements, or pays you their cash value, based on what their equivalent would cost today.

The disadvantage of these policies is that the premiums tend to cost more than with other types of contents insurance. Unlike new for old, wear and tear cover, for example, takes into account age and usage damage when calculating the value of items, so it’s likely to pay out less. With both policy types you’ll need to pay an excess each time you claim.

What’s covered under new for old?

You should always check your policy details to see what’s covered, but typically new for old contents insurance includes cover for:

• Loss, theft and accidental damage – you’re covered for burglaries and accidental damage like spilling red wine over a new carpet, but not for items damaged or broken through wear and tear
• Electronics and gadgets – like televisions, smartphones, tablets, sound systems and computers
• Carpets and rugs – floor coverings like rugs and carpets are potentially expensive items to replace if damaged
• Sport and leisure – from books, sports equipment and toys to musical instruments
• Home appliances – such as fridge freezers, vacuum cleaners, washing machines and cookers
• Furniture – including sofas, beds, bookcases, tables and mirrors
• Personal items and valuables – like pictures, jewellery, silverware, porcelain and antiques

How does new for old cover work?

When you need to make a claim, this type of policy will replace your item with a similar new model, or provide you with a pay-out to cover its current value – no matter what condition your possession was in or how much you paid for it originally.

To make sure you’re fully covered and to get an accurate quote from your insurer, you’ll need to work out the cost of your belongings and how much it would cost you now to replace each item as new.

Items that have a limited lifespan and those more prone to wear and tear, like bed linen, clothes and curtains, are often excluded from new for old contents policies.

What’s the difference between new for old and wear and tear?

New for old cover replaces your items with their new equivalents, no matter what condition or age they were at the time of their theft or damage.

On the other hand, standard contents insurance takes into account the wear and tear of your belongings when you make a claim.

For this reason, standard home insurance is also known as a ‘wear and tear’ policy. Generally, premiums for this type of policy are cheaper than with new for old cover.

When you make a valid claim with a wear and tear policy, instead of receiving the cost of a like-for-like new product, the amount you’ll get will reflect the item’s age and current second-hand value.

How do I know if my policy is new for old or wear and tear?

To find out what type of cover you have, you’ll need to check your policy details. Your insurance provider will state on its policy documents whether it’s covering your contents on a new for old, or wear and tear basis.

Most policies provide new for old cover as standard, but it’s a good idea to check the small print and see exactly what you’re covered for before you buy contents insurance.

It’s also advisable to regularly update your contents insurance and check the items you have covered to make sure you aren’t left out of pocket if you need to make a claim. This is particularly important when you buy any high-value items that are worth over £1000, such as jewellery or electronic goods.

You’ll need to work out what type and how much cover is best for you and your circumstances so that you can get the right level of contents insurance you need.

If you’re unsure what your policy covers you for, just ask your insurer.

How to value your contents?

You should value all the contents in your home as accurately as you can – basing the costs on what you’d need to pay to replace them today – to make sure the sum you’re insured for will be enough.

Your contents aren’t just your valuables but any possessions you can easily remove from your home. The fixtures and fittings, like windows or bathroom suites, would be covered by your buildings insurance policy.

It’s a good idea to go from room to room looking at what contents you’ll need to include, remembering to check areas like your loft and garage.

If you have any belongings, usually worth more than £1,500 you’ll need to let your insurers know, and get up-to-date valuations for items like jewellery. For higher-priced possessions like these, insurers apply a ‘single article limit’ and if your item gets damaged or stolen, the insurer will only pay a capped sum for it, unless you separately list the items worth more than this limit. The limit can differ between objects as well as between insurers, so it’s worth comparing policies.

You could find yourself paying higher premiums if you overestimate the cost of your contents – but underestimating means you may be underinsured when you need to make a claim, leaving you with a significant shortfall.

This is why it’s important to do your research when calculating how much your belongings are worth.

How can I find affordable new for old insurance cover?

To find the cheapest quotes for new for old insurance cover, it’s best to compare quotes from several different providers.

Each provider will state in their policy documents whether their cover is on a new for old or wear and tear basis. Weigh up how much you can afford to pay in monthly premiums with the cost of how much it would be to replace your items as new to help you decide.