What Is New-for-Old Cover?
New-for-old cover means your insurer replaces damaged or stolen items with brand new equivalents, regardless of how old the originals were, with no deduction for wear and tear or depreciation.
Most standard contents insurance policies include new-for-old as the default. The alternative is indemnity cover, which deducts for depreciation and pays out the second-hand value instead.
This guide explains how new-for-old works, how it differs from indemnity, which items may be excluded, and how to check what your policy offers.
New-for-old replaces what you lost with a brand new equivalent, with no deduction for age or wear. Indemnity cover does the opposite and pays what the item was worth on the day, which on a ten-year-old sofa is very little. Check which basis your policy actually uses, because clothing and linen are commonly excluded even on new-for-old policies.
Compare home insurance quotes with new-for-old cover as standard.
How does new-for-old cover work?
New-for-old cover pays the full replacement cost of a damaged or stolen item with a brand new equivalent of similar type and quality, with no reduction for age or condition.
How claims are settled
When you claim, your insurer either pays you the cost of a new equivalent item or arranges a replacement directly. Either way, you receive something new rather than a cash settlement based on the item’s depreciated value.
Why it matters for everyday items
Items that depreciate quickly benefit most from new-for-old. A laptop that cost £800 three years ago might be worth very little second-hand, but new-for-old cover pays for a current equivalent.
The same applies to televisions, appliances, and furniture. Without new-for-old, you would need to fund the gap between the indemnity payout and the actual replacement cost yourself.
What is the difference between new-for-old and indemnity cover?
New-for-old pays the full cost of a brand new replacement. Indemnity pays the current second-hand value after deducting for wear and tear.
| Feature | New-for-Old | Indemnity |
| Payout basis | Full cost of a new equivalent item | Current second-hand value after depreciation |
| Depreciation deducted? | No | Yes |
| Best for | Most households with everyday possessions | Budget cover or very old belongings |
| Typical availability | Standard on most mid-range and premium policies | Found on budget or basic policies |
| Claim outcome | You can afford to replace the item | You may need to top up from your own pocket |
When the gap is largest
The difference between new-for-old and indemnity payouts widens as items age. A one-year-old appliance might show only a small gap between the two.
A five-year-old sofa or television could see the indemnity payout drop to a fraction of the replacement cost, leaving you hundreds of pounds short if you need to buy a replacement.
When indemnity makes sense
Indemnity cover costs less because the potential payouts are lower. It can suit you if your belongings are mostly old or low-value and you would not replace them with brand new equivalents anyway.
Which items are not covered on a new-for-old basis?
Some policies exclude certain categories of items from new-for-old replacement and cover them on an indemnity basis instead, so reading your policy wording matters.
Clothing
Some insurers cover clothing on an indemnity basis, accounting for wear. Others include clothing under new-for-old, so check your policy summary.
Antiques and collectibles
Items valued for their age cannot be replaced as new in a meaningful sense. These are typically covered at their current market value or an agreed value set when you take out the policy.
Items above the single-item limit
Most policies set a per-item limit, typically £1,500 to £2,500. Items worth more than this need to be listed and valued individually on the policy to receive full replacement cover.
Second-hand or refurbished goods
Items bought second-hand may only be covered for what you paid, depending on the insurer. If you buy refurbished electronics, check whether your policy treats them differently from new purchases.
How do you check whether your policy includes new-for-old?
Look for the terms new-for-old, replacement as new, or full replacement in your policy summary or key facts document.
What to look for
When comparing home insurance quotes, the policy summary should state whether contents are covered on a new-for-old or indemnity basis. If these terms are absent, the policy likely offers indemnity cover.
Item-level exclusions
Even policies that include new-for-old may exclude certain item categories. Check whether clothing, antiques, or high-value items are covered on a different basis.
Specified items
High-value items (jewellery, watches, art) often need to be individually listed and valued on the policy. The ABI guide to home insurance explains how to make sure valuable items are properly covered.
Buildings insurance
New-for-old is primarily a contents feature. Buildings insurance works differently, paying to repair or rebuild damaged parts of your property to their previous condition rather than replacing items.
Is new-for-old cover worth the cost?
For most households, yes. New-for-old is standard on most mid-range policies and the premium difference compared to indemnity-only cover is typically modest relative to the much better payouts.
The real cost of indemnity
On an indemnity policy, a claim for a three-year-old laptop or a five-year-old sofa could leave you with a payout that covers only a fraction of the replacement cost. You would need to find the difference from savings.
Who benefits most
Households with a mix of everyday electronics, appliances, and furniture get the most value from new-for-old. Renters benefit equally, as contents insurance for tenants works the same way as for homeowners.
Comparing policies
Under FCA pricing rules (from January 2022), renewing customers cannot be charged more than equivalent new customers. Comparing annually is still worth doing because cover terms and item exclusions vary between providers.
If you have a complaint
If your insurer settles a claim on an indemnity basis when your policy states new-for-old, the Financial Ombudsman Service can review your complaint at no cost to you.
Frequently Asked Questions (FAQs)
New-for-old is primarily a contents insurance feature. Buildings insurance pays to repair or rebuild damaged parts of your property to their previous condition, which achieves a similar result since you end up with a properly repaired home.
If the exact item is no longer sold, your insurer will typically pay for a new item of similar type, quality, and specification. Some policies allow you to choose a different item of equivalent value.
Accidental damage is a separate type of cover that determines what events are covered, while new-for-old determines how your payout is calculated. If you have both, a replacement after an accidental damage claim would be on a new-for-old basis.
Yes. Contents insurance for tenants works the same way as for homeowners, and most standard policies include new-for-old as the default.
The premium difference between new-for-old and indemnity-only policies is typically small. Many mid-range and premium policies include new-for-old as standard at no extra cost.
Your insurer may ask for receipts, bank statements, or photographs as evidence of ownership and value. Keeping a home inventory with proof of purchase makes the claims process faster.
Contact your insurer and ask them to review the settlement against your policy terms. If the issue is not resolved, the Financial Ombudsman Service can investigate your complaint at no cost.