New value or current value? How to prevent your insurance company from "calculating the value" of your belongings as old

💎 The new-for-old advantage: Why your home contents insurance should be worth its weight in gold.

Imagine your home is turned upside down after a fire or water damage. Amidst the chaos of filing an insurance claim, you're faced with a crucial financial question: What is your lost property really worth? This is often a point of contention between you and the insurance company. It all comes down to the crucial difference between replacement value and current market value .

A comprehensive home contents insurance policy that covers replacement value is invaluable here. It ensures that in the event of damage, you won't be left with the depreciated value of your belongings after years of use, but will receive the amount necessary for a complete replacement.

New or current value

💰 New value vs. current value: The financial difference

To understand the principle, we need to look at the two basic values ​​according to which insurance companies can settle a claim:

  1. Replacement value: This is the amount you would have to spend today to replace an item with a new one of the same type and quality (including shipping costs or installation).

  2. Current value: This is the replacement value minus the depreciation due to age and wear and tear. The simplified formula is: Current value = Replacement value – Depreciation due to age and use.

ExampleNew priceCurrent value (after 5 years)
Television (purchase price 5 years ago: €1,000)€1,000 (for an equivalent new model)€300 – €500 (depending on age-related deductions)
The catch: If the insurance company only settled for the current market value, you would have to pay the difference yourself to replace the television. This is precisely what the replacement value coverage in home contents insurance is designed to prevent.
 

🛡️ Replacement cost compensation: What exactly does that mean?

The standard and recommendation for a modern home contents insurance policy is replacement value coverage . This guarantees that the insurance company will cover the costs of replacement or repair at the new value .

Important: The replacement value is not always paid out immediately. Many contracts stipulate:

  • Payment of current value (as an advance): Often, the current value is determined first and paid out as immediate aid to provide you with liquidity.

  • Remaining balance payment (new value): The remaining balance up to the new value will be paid as soon as you have actually made the replacement purchase and have provided proof through invoices.

🛑 The trap: The "new for old" deduction

The dreaded "new for old" deduction is the reason why compensation at replacement value is so important. This deduction is applied when the repair or replacement of the damaged item results in a permanent, measurable increase in value that exceeds its original condition before the damage.

Example: Your old carpet (15 years old) is replaced with a new one. The insurance company could argue that the new carpet has a much longer lifespan than the damaged original and therefore make a deduction if replacement cost coverage has not been agreed upon.

With replacement cost coverage in your home contents insurance, this deduction is usually completely eliminated. Your policy thus acts as a shield against the depreciation of your damaged belongings.

✅ Conclusion and your procedure in case of damage

The replacement value clause is the core of your home contents insurance and guarantees you financial security.

Here's how to ensure your compensation is fair:

  1. Check your policy: Make sure that replacement value settlement is explicitly agreed upon in your home contents insurance.

  2. Documentation: After damage has occurred, keep all purchase receipts for replacements to prove the new value and receive full compensation.

  3. Quick help: In case of damage, use claims assistance and ask about the new value status of your policy.

📄 Which documents you need for a quick damage report >>>

First aid for damages – Use it now for free!

Take advantage of our free claims assistance for your first insurance claim. A professional insurance expert will support you directly – quickly, easily, and reliably!

Get free help