Does contents insurance pay out the new-for-old value?
When you have damage to your belongings, your insurer will pay this damage to you. However, there is a difference between the daily value and the new-for-old value of your belongings. In most cases, an insurer pays out the new-for-old value, but there are some exceptions....
What is the difference between daily value and new value?
When your belongings are damaged by fire or theft, you can claim the damage from your insurer. For example, if your television was stolen and it cost 1,200 euros in the store, that is the new value of the product. The daily value of the product is the value the product has just before the damage occurred. So if you've had your television for a year, the value may have dropped from 1,200 euros to 600 euros. So the daily value is usually a lot lower than the new value of the product.
When does the insurer pay out the daily value?
Different insurers have different rules. In the policy conditions of your contents insurance you can always find the rules about the new value and the current value. Usually the current value is paid out if the current value is less than 40% of the new value. The current value is determined by the insurer based on depreciation lists. For example, a couch is depreciated over 10 years, so each year the value decreases by 10%. Once the sofa is 6 years old, the value drops below 40% and the maximum current value is paid out.
There are other details that will cause the insurer to pay out the daily value:
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When things are no longer used for their intended purpose
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Damage to vessels and trailers
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Damage to awnings and antennas.
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Stuff you borrowed
Insurers assume repair costs
When your belongings are damaged by fire or a storm, for example, you don't get everything new right away. If a fire has caused a stain in your couch, the insurer will first see if repair is cheaper. Only if the repair costs exceed the new value, insurers will pay out this value.
If your insurer assumes the daily value, the repair costs will also be reimbursed unless they exceed the daily value.
Taking out household contents insurance? Calculate your premium!
What about depreciating your contents?
Many insurance companies publish the depreciation lists they use. You can check your insurer's website to see if they have also published depreciation lists. In these lists, you can see how much your contents are worth at that time. For example, a closet is depreciated over ten years. So a four-year-old closet still has a value of 60% of its new value. If the cupboard is lost in a fire, you will still be paid the new value.
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