Find out how you can have your car replaced with a brand new vehicle if it is stolen or written off.
A gleaming car, straight from the showroom floor, can be an attractive target for thieves, and it’s heartbreaking when your new set of wheels disappears before you’ve hardly had the chance to take it for a spin.
Fortunately, if you have comprehensive car insurance, a brand new replacement vehicle is usually one of the perks you’re entitled to if your car is written off or stolen within months of becoming yours.
Consider new car replacement cover with one of these comprehensive policies
What is new car replacement?
Under most comprehensive policies, if your brand new car is declared a total loss within two years of purchase, you are eligible to have it replaced with another unused vehicle of the same type. Many insurers also specify they will only replace a new car if it has 40,000km or less on the odometer.
What are my options?
New car replacement cover is normally included as a standard feature of comprehensive car insurance policies. Some insurers even offer new-for-old replacement for the life of your car under some circumstances. This is normally sold as an extra or as part of a top-end comprehensive policy and is subject to additional criteria.
When am I eligible for new car replacement?
- You must be the first registered owner of the car.
- You are often eligible for new car replacement even if the vehicle was pre-registered as a demo model by the dealer, but this is not the case with all insurers.
- If your vehicle was purchased with the aid of a car loan, your credit provider must give permission for the original vehicle to be replaced with a new one.
What happens after my car is replaced?
This varies from insurer to insurer. In some cases, the insurer will transfer your policy to the new vehicle. In others, your cover ends and you must obtain a new policy for your replacement car. Read the product disclosure statement (PDS) carefully to know exactly what rules apply.
In what situation would I receive a replacement vehicle?
Most insurers will offer a new car replacement if your vehicle is a total loss, usually defined by three criteria.
- Your vehicle was stolen and could not be recovered for a specified period of time, for example 14 days.
- The cost of repairing your vehicle exceeds the sum insured.
- Your car cannot be repaired well enough to ensure that it will be safe to drive.
What kind of car will I receive?
- Same make, model and series. The replacement car will basically be the current version of the car that was insured.
- Accessories and modifications included. If you loaded your new car with expensive optional extras, most insurers agree to provide you with a replacement vehicle kitted out in the same way.
- On-road costs are covered. Most insurers will cover compulsory third party (CTP) insurance and throw in stamp duty plus 12 months’ registration.
What type of exclusions are there?
- You will usually not be covered for any extended warranty you purchased for the original vehicle.
- A basic excess often applies, but some insurers will waive this if your car is written off in an accident where you were not at fault.
- Some insurers stipulate a maximum tare weight limit for the vehicle to be eligible for new car replacement.
What are the limitations of new car replacement plans?
The main pitfall to be wary of with new car replacement insurance is its validity period. As soon as your car is more than two years old, or once you’ve crossed the 40,000km limit (if this applies to your policy), your sum insured will plummet if you have chosen market value rather than agreed value on your insurance.
Another risk is that a similar replacement car may not be available. This is particularly relevant if you’ve forked out for a policy that features a lifetime new-for-old replacement option. Some insurers attempt to avoid supplying a brand new vehicle on the basis they can’t find a suitable replacement, especially if the alternative is to pay you market value instead.
If you are faced with this problem, it is usually worth searching for a replacement vehicle yourself. If you succeed in finding one within the time limit specified on your policy, the insurer is obligated to deliver it as your replacement.
What are the alternatives to new car replacement?
- Agreed value car insurance. Even if your car is less than two years old, you will usually not be eligible for new car replacement if you are not the first registered owner. However, you can estimate how much a new replacement vehicle would cost and negotiate an agreed value to cover this with your insurer.
- New-for-old lifetime insurance. Some insurers will replace your car with a new one even after its second birthday, if your vehicle has been continuously insured under a top-end comprehensive policy within 13 months of purchase. In this case, the insurer has the right to decide on a suitably similar new car, considering parameters such as engine size, type of finish, optional extras and so on.