How does new-for-old work with second hand items?

nik_k

My contents insurance policy is a new-for-old policy. It's clear how this would work for items I have purchased new, but I'm unclear how second hand items are treated.

Is it a case that the insurance should still cover the cost of replacing an item with a similar spec new item, or would the policy only cover up to the amount paid second hand for the item?

My specific query relates to a claim I have initiated for accidental damage (covered under my policy) sustained by a TV I purchased second hand. Subject to confirmation, this damage is likely to have rendered the TV uneconomical to repair. Of course, the claims handler asked how much I paid for the TV, and also took the model number.

I haven't been able to find any information in either my policy book, or by Googling.

Thanks in advance for any advice/opinions offered!

InsideInsurance

New for old is irrespective how you bought them so if you buy it new or secondhand you are still entitled to a new replacement unless your policy says otherwise (not aware of any that do)

nik_k

InsideInsurance wrote: »

New for old is irrespective how you bought them so if you buy it new or secondhand you are still entitled to a new replacement unless your policy says otherwise (not aware of any that do)

OK, so it'll be interesting to see what happens then. My reason for asking is that the price I said I paid for the TV is the price they have listed as 'Value to Replace' on the claim. However, the price I paid would not replace the TV with an equivalent model on the high street today

InsideInsurance

Then inform them that the form is incorrect, the price you gave them was the price you paid not the price to replace it. There are plenty of items where new prices continue to rise (jewelry, watches etc) and so what you paid is fairly irrelevant even if you buy new. My colleague paid £1,600 for his Omega watch new, the same watch now is £3,450 or so.

In practice for common items like TVs insurers normally appoint a company to deal with the claim for them and they will only be interested in the make/ model and excess

nik_k

Great, I will do! Thanks for your amazingly prompt help

eddddy

If you have lots of secondhand stuff, the thing you have to be careful about is that you have sufficient cover on your contents policy to cover the new replacement cost of everything.

e.g. Your entire home contents may have only cost you £5,000 because you buy everything secondhand on eBay, car boot sales etc. But it might cost £50,000 to replace with new equivalent stuff.

So you need to have £50,000 contents cover.

Say you only had £25,000 of cover - you would then be under insured by 50%, so theoretically, the insurance co could reduce your TV claim by 50%.

(But, in reality, I doubt they would bother investigating for small claim like this anyway. Unless your TV is really expensive to replace, or you raise their suspicions in some way!)

System

Presumably it is possible to specifically exclude items from the insurance cover if you chose?

InsideInsurance

Clifford_Pope wrote: »

Presumably it is possible to specifically exclude items from the insurance cover if you chose?

Not normally.

As an example, say have £5m of diamonds but you are happy to have them excluded from the insurance the fact they are in your home will change the risk profile of the property and your insurers would still be on the hook for damage to the property and other things they steal whilst going for the diamonds.

Per the guys who had their bag with £30k of cash and a £10k watch stolen, the working theory is that they saw two guys with a lot of money and followed them to see where they were staying.

When you get into HNW policies where an actual underwriter is involved rather than just a computer then you can have more conversations about excluding something that may be covered by another more specific policy as they can factor in the change in risk profile but not increased limits.

System

InsideInsurance wrote: »

As an example, say have £5m of diamonds but you are happy to have them excluded from the insurance

I was thinking more of the other extreme. Say I furnished my house with stuff pulled out of skips, and only had about £10,000 worth of items of any real value. I wouldn't want or need to insure say the sofa for the £1000 it would cost to replace with a new one. So I'd be happy for it to be excluded from the insurance because it represented a risk neither for me nor the insurance company.

In contrast to your diamond example, this would actually make the place less risky for the actual insured items, because a burglar would take one look inside, sniff and say "Load of rubbish in here - let's try next door".

InsideInsurance

Clifford_Pope wrote: »

I was thinking more of the other extreme. Say I furnished my house with stuff pulled out of skips, and only had about £10,000 worth of items of any real value. I wouldn't want or need to insure say the sofa for the £1000 it would cost to replace with a new one. So I'd be happy for it to be excluded from the insurance because it represented a risk neither for me nor the insurance company.

In contrast to your diamond example, this would actually make the place less risky for the actual insured items, because a burglar would take one look inside, sniff and say "Load of rubbish in here - let's try next door".

You could look for a policy that isnt new for old in which case the total sum insured would only be the secondhand value of all the items. In theory it would reflect their condition immediately prior to the claim but normally in practice its a calculated value based on depreciation.

You still couldnt exclude items but at least the beat up old solid oak dining table from John Lewis is now valued at £50 rather than £1,000

The "problem" you may find however is that like any product you buy the price paid is a combination of cost (risk for insurers and manufacturing costs/ raw materials etc for people selling physical goods) and commercial considerations (competition, price sensitivity of the consumer etc).

As almost all policies are new for old you may well find that insuring everything on that basis for £40,000 may well be cheaper than only looking at the few insurers that dont do new for old and so you can insure your contents for £10,000 with them as market pressure has forced down the price of the mass market product

nik_k

Next questions folks...

To what extent should I be expected to do the running round for the insurers? They've sent me a letter saying this...

To progress your claim further we've agreed that you will get me an estimate to repair the TV and an estimate to replace the TV. Should the TV not be repairable can you get me a cause of damage report which would state that the TV cant be repaired. I will also require pictures of the damage TV

I can easily take photos of the TV, but as for getting an estimate to repair the TV and a cause of damage report, surely this is the insurer's responsibility?