How does new-for-old car insurance work?

Finance Journalist · 1 September 2020
Has your car been written off? In some cases, your insurer may replace your old car with a brand new one.

What is new-for-old car replacement?

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’.

Your car will need to have been assessed as a total loss or a ‘write-off’ due to an insured event, such as a collision, a natural disaster, theft or vandalism.

If the same make and model of car is not available as a replacement, your insurer will typically provide you with a similar car assuming your policy does offer new-for-old cover. If it doesn’t, or if there isn’t one, 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. If you have added accessories or modifications to your car, some insurers will also take this into account when replacing your vehicle. Depending on the circumstances of the claim, you may also need to pay an excess. Terms and conditions can vary, so it’s important to read into this carefully when you are comparing policies.

Am I eligible for new-for-old car replacement?

To be eligible for a new car replacement, most insurers will require that your car is less than two years old. However, this can vary depending on the insurer. For example, of the comprehensive car insurance policies in Canstar’s database with new for old car replacement, the period of cover ranges from 12 months to 48 months. A handful of 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. This means that you won’t be able to get a new car replacement if your car’s odometer has reached a certain distance. This usually ranges from 20,000 kilometres to 70,000 kilometres from the car’s original registration, based on policies in our database.

Your insurer may also require you to be the first registered owner of your car, although 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.

Who offers new-for-old car replacement?

New-for-old car replacement is available on most comprehensive car insurance policies. For example, of the 62 comprehensive car insurance policies in Canstar’s database, 61 policies offer this as a standard inclusion and one policy offers this as an optional extra (in other words, you have to pay extra for it).

You can compare a range of car insurance policies using Canstar’s car insurance comparison tables. Canstar researches and rates car insurance based on both price and features. Find out which ones have received a 5-Star Rating.

If you’re looking for ways to save money on your premiums, you might want to check out our list of car insurance discounts and sign-up offers currently available.

This article was reviewed by our Sub-Editor Tom Letts and Finance Editor Sean Callery before it was updated, as part of our fact-checking process.

Main image source: Huguette Roe (Shutterstock). 

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