If you have a new car and it is written off during the first few years of owning it, many car insurers in Australia will replace the car with a new one of the same make and model. This is known as ‘new for old car replacement’ or ‘new car in case of write-off’.
How does new for old car insurance work?
In the case of an insured event (like a collision, natural disaster, theft or vandalism), your car will need to be assessed as a total loss or a ‘write-off’ (unsafe to drive or uneconomical to repair).
If the same make and model of car is not available as a replacement, your insurer will typically provide you with a similar car.
If a replacement car isn’t included in your policy, you may be paid the vehicle’s market or agreed value, depending on your certificate of insurance.
Your insurer may also pay some of your new car’s on-road costs, including the first 12 months of registration, CTP insurance and delivery charges.
Some insurers will also take any added accessories or modifications to your car into account when replacing your vehicle.
Depending on the claim, you may also need to pay an excess (the portion of the bill you pay to access your policy’s benefits).
Terms and conditions can vary, so it’s important to read each policy’s Product Disclosure Statement and Target Market Determination when comparing policies.
Am I eligible for new for old car replacement?
Whether or not you’re eligible for new for old car replacement will vary depending on the policy and insurer you’re signed up to:
- Some insurers will require that your car is less than two years old. However, this can vary depending on the insurer.
- Some insurers also offer lifetime new for old car replacement. This covers your car for life, provided you meet the insurer’s other eligibility criteria.
- Some insurers also have a kilometres stipulation, meaning you won’t be eligible for a new car replacement if your car’s odometer has reached a certain distance (typically ranging from 20,000 kilometres to 70,000 kilometres from the car’s original registration).
- You may be required to be the first registered owner of your car. If you have an ex-demo car, you will generally also be eligible, provided the dealer was the first registered owner.
If you have purchased your car using a car loan, your lender will also typically need to agree with your car being replaced.
Is new for old car insurance worth it?
New for old car replacement is an inclusion on many comprehensive car insurance policies. If you’re wondering if this kind of cover is worth it for you, it’s important to weigh up the pros and cons.
Some possible pros of new for old car insurance include:
- You’ll get a new car equivalent to your old one if it gets written off
- The process of getting this new car will be relatively streamlined
- You’ll have the peace of mind of knowing you’re covered.
However, it’s also important to be mindful of some potential drawbacks:
- The eligibility criteria for new for old replacement can be strict
- You may not be eligible if your car is too old, or is a modified or specialty vehicle
- New for old cover can be more expensive.
