New for old cover is an insurance basis that replaces a lost, stolen or damaged item with a brand-new equivalent, without deducting for age or wear. It is common in home contents policies for possessions like furniture and electronics.
In one line: New for old cover replaces an insured item with a new equivalent, ignoring wear and age.
How new for old cover works
Under new for old cover, the insurer pays to replace an item with the nearest current equivalent rather than its second-hand value. This is typical for home contents, though clothing and linen are often excluded and settled on a wear-adjusted basis.
If a five-year-old television is destroyed by an insured event, new for old cover pays for a comparable new set at perhaps 600 GBP, even though the original might fetch only 150 GBP on a used basis today.
Premiums for new for old cover tend to be higher than for indemnity cover, because the insurer's potential payout is larger.
New for old vs indemnity cover
New for old cover replaces items as new. Indemnity cover instead pays the depreciated value, deducting for age and wear, so the payout on an old item can be much smaller.
Buildings cover is usually arranged on a reinstatement basis, while contents cover is where the new for old versus indemnity distinction matters most.
Primary source: FCA: Insurance