If your new car is written off within 2 years of you buying it, new for old car insurance can reimburse you to buy a new one. This a handy feature that's included in most comprehensive policies. We've listed some car insurers that offer this type of cover below.
Protect future you - get new for old car insurance
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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.
Is new car replacement worth it?
Most comprehensive policies, with a few exceptions, will automatically include new for old replacement cover. However, if you're wondering whether it's worth it, consider the following:
Do you have a new car? First and foremost, it's only worth it if you are eligible. In most cases, your car needs to be less than 2 years old for you to be covered. There is also sometimes a 40,000km odometer limit.
Do you live in an area prone to floods, storms or natural disasters? As Australia's climate crisis intensifies, the chances of extreme weather where you live increases. If your new car was written off due to an act of nature, a new car replacement benefit would ensure you got either one of the same model or of the same market value.
Could you afford to replace your new car? New cars are expensive. Most of us couldn't afford to just go out and buy a new one if ours was written off. New for old replacement ensures you don't have to worry about that.
What about if you're in a crash? New car replacement is designed to help you financially in case your car is written off. In most cases, this is because of a collision. If you're willing to take the risk with such a big investment, then new car insurance probably isn't worth it for you. Otherwise, it's a really helpful benefit you'll be thankful you got if something goes wrong.
Does it cost extra to get new for old car insurance cover?
Not really. Basically, if car insurers didn't offer it, it probably would result in very slightly cheaper premiums. However, most automatically include it in their comprehensive car insurance policies. Budget Direct, Youi, Coles, Virgin, Qantas and Real all cover new car replacement. If you want to go with a major provider, it's probably not going to cost you any more money.
One of the few car insurers to offer it as an optional extra is Bingle. However, if you wanted to add new car replacement on to a Bingle comprehensive policy, it'll only cost you around $2* more a month.
*$62.21 without new for old and $64.45 with new for old, based on a 30 year old male driving a 2019 Toyota Corolla (automatic).
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.
Comprehensive car insurance policies that offer New Car Replacement
If your car is written off or stolen in the first 2 years
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Gary Ross Hunter is an editor at Finder, specialising in insurance. He’s been writing about life, travel, home, car, pet and health insurance for over 6 years and regularly appears as an insurance expert in publications including The Sydney Morning Herald, The Guardian and news.com.au. Gary holds a Kaplan Tier 2 General Advice General Insurance certification which meets the requirements of ASIC Regulatory Guide 146 (RG146).
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