How Does New for Old Car Insurance Work?

Find out what new for old car insurance is, its benefits and limitations, and whether you qualify in Savvy’s handy guide.

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, updated on February 16th, 2024       

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Car Insurance Banner - Man smiling holding the keys to his new car

Car insurance plays a vital role in protecting our vehicles, but if your car is written off replacing it can be costly and time-consuming. New for old car insurance gives you peace of mind that your insurer will replace your damaged or stolen car with a new one of the same make and model.

In this informative guide, we explore how new for old car insurance works, the benefits it offers as well as its limitations.

What is new for old car insurance?

New for old car insurance, also known as new for old car replacement, is a feature of many comprehensive car insurance policies in Australia. If your car is written off after an insured event such as theft or damage, your insurer will provide a replacement vehicle of the same make and model, or similar if this is not available. They may also include accessories and modifications made to your original vehicle and may cover your new car’s on-road costs, such as registration, Compulsory Third Part (CTP) insurance and delivery costs.

To qualify, certain criteria must be met. Generally, the following conditions apply:

  • Age limit: the car must be less than a certain age – often two years, but sometimes up to three years or as little as 12 months old. However, certain policies may offer lifetime new for old replacement.
  • Kilometre limit: the car must have travelled less than a certain distance from its original registration, typically ranging from 20,000 to 70,000km.
  • Ownership: you must be the first registered owner of the car or have purchased the vehicle as an ex-demo model.
  • Lender agreement: if you took out a car loan to purchase your vehicle, generally your lender will also need to agree to your car being replaced.

If you are not eligible for new for old cover, perhaps because your car is already too old at the time of insurance, if your car is written off you will instead receive a payout for the car’s agreed or market value, depending on what you agreed with your insurer when taking out the policy.

What are the benefits of new for old car insurance?

There are several benefits to new for old car insurance:

  • Full replacement value: you get a brand-new car equivalent to your written-off vehicle, without depreciation affecting the value.
  • Financial security: cars are significant investments, but new for old ensures you get a new vehicle without having to bear the financial burden.
  • Seamless transition: the process of getting a new car is smooth, quick and hassle-free as your car insurance company provides the vehicle, meaning you do not need to search for a replacement or haggle with dealers.
  • Peace of mind: knowing your insurer will provide a new car offers reassurance and eliminates financial worries.

Are there any limitations on new for old car insurance?

Despite the benefits, it’s important to be aware of potential limitations associated with new for old car replacement. Here are some factors to consider:

  • Age and distance restrictions: cover is limited to vehicles within a specific age and kilometre range, meaning this benefit will not apply to older or more heavily used vehicles.
  • Higher premiums: coverage may come with slightly higher insurance premiums compared to standard policies.
  • Exclusions for certain vehicles: not all cars may qualify, such as heavily modified, specialty or vintage models.
  • Policy variations: terms differ among insurers – for example, some policies may require you to pay an excess or have certain exclusions – so you should check the Product Disclosure Statement (PDS) for specific coverage details.

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Savvy (ABN 78 660 493 194, ACR 541 339) provides readers with a variety of car insurance policies to compare. Savvy earns a commission from our partnered insurers each time a customer buys a car insurance policy via our website. All purchases are conducted via our partners’ websites. The integrity of our comparison service is unaffected by our partnerships with those businesses and our effort remains to bring further brands that do not already use our comparison service onboard.

Savvy’s comparison service includes selected products from a panel of trusted insurers and does not compare all products in the market. Any advice presented above or on other pages is general in nature and doesn’t consider your personal or business objectives, needs or finances. It’s always important to consider whether advice is suitable for you before purchasing an insurance policy. We always recommend readers to consult the Product Disclosure Statement (PDS) of different policies before purchasing your car insurance.

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