New for old sounds generous. Almost suspiciously so. Replace your old things with brand-new equivalents? Lovely. The catch is that the phrase does a lot of work, and not all of it is obvious at first glance.
New for old is a settlement basis used in many home insurance policies, mainly for contents and sometimes for parts of buildings. It describes how claims are paid, not what is insured.
What new for old actually does
Under a new for old settlement, an insurer aims to replace damaged or stolen items with new equivalents, rather than paying a reduced amount to reflect age or wear.
If a five-year-old television is stolen, the insurer looks to replace it with a comparable new model, not a five-year-old one or a cash figure based on depreciation.
- Applies mainly to contents
- Replacement is for a like-for-like modern equivalent
- Settlement is usually item-based rather than cash-based
That distinction matters when expectations meet reality.
New for old is not unlimited
One of the most common misconceptions is that new for old removes limits. It does not.
Single-item limits still apply. Total contents limits still apply. Policy conditions still apply.
If an item exceeds the policy’s single-item limit and hasn’t been specified, the settlement may fall short regardless of how new the replacement is meant to be.
Like-for-like is not identical
New for old does not mean identical replacement. It means a reasonable modern equivalent.
That can be awkward with older or discontinued items. A solid wood table made decades ago may be replaced with a modern equivalent rather than an exact match. The same goes for appliances and electronics.
Insurers work to specification, not sentiment.
Condition still matters
New for old does not erase condition. Items that were already damaged, poorly maintained, or not fit for purpose may be treated differently.
If something was barely functioning before the claim, it may not be replaced on a full new for old basis.
Claims assessors look at what was lost, not what it once was when new.
How underinsurance causes problems
New for old relies on accurate sums insured. If contents values are too low, the policy may not respond as expected.
Some policies apply proportionate settlement where underinsurance exists. That means even a valid claim can be reduced across the board.
- Understated contents values can affect all items
- Single-item limits still cap settlements
- Policy wording governs how reductions are applied
New for old does not correct underestimation.
Buildings insurance and new for old
Buildings insurance sometimes includes a form of new for old settlement, particularly where damaged parts of the structure are replaced with modern materials.
That does not mean an old property is rebuilt to modern standards throughout. Only the damaged parts are addressed, and usually only to the extent required.
Upgrades triggered by regulations may be included, but that depends on wording.
Cash settlements versus replacement
New for old often assumes replacement rather than cash. Insurers may offer to source items directly or pay suppliers.
Cash alternatives can be lower, reflecting trade prices or supplier discounts.
That difference can surprise people expecting a simple cheque.
Accidental damage and new for old
New for old does not automatically include accidental damage. If accidental damage is excluded or optional and not selected, the settlement basis becomes irrelevant.
Spilled paint on a carpet is only considered on a new for old basis if the event itself is insured.
Tenants, landlords and expectations
For tenants, new for old applies to their belongings under contents insurance, not to the landlord’s fixtures.
For landlords, it applies to landlord-owned contents, not tenants’ items.
Confusion here often leads to claims being aimed at the wrong policy.
Policy wording always wins
New for old is a headline feature, not a blanket promise. The detail sits in the policy wording, alongside limits, conditions and exclusions.
Two policies can both advertise new for old and still behave very differently once a claim is assessed.
Understanding where the boundaries sit makes new for old useful rather than disappointing when it’s tested.