There are a number of ways in which your contents claim can be settled, including like-for-like replacement. Let’s take a closer look at what is meant by this.
What does like-for-like replacement mean?
If your insurer offers like-for-like replacement, they will do their best to replace your contents with a like-for-like item or the nearest available equivalent when you make a claim. Your insurer will find a replacement that is readily available in New Zealand with the same functions, characteristics and specifications. This could mean that the nearest equivalent item may not necessarily have the same brand, price, model or colour of the damaged or lost item, but it will still match the functionality of the item being replaced. For more information refer to the ‘How we will settle your claim’ section of your policy documents.
Most items are covered like for like, but there are some exceptions, such as clothing, footwear, cosmetics or items that don’t have an equivalent replacement available. Those will be settled at the market value, which is the reasonable retail value of the items immediately before they suffered a loss under the policy. The market value amount is based on the condition of the item immediately prior to the loss, its make, model, age and capability, with due allowance for wear, tear, depreciation and prior maintenance.
An example of like-for-like replacement
Charlotte’s handbag was stolen from her friend’s car. In it, she’d left the cell phone she’d bought six months ago, half a bottle of perfume, and the remains of her favourite lipstick. She lodged a claim with her insurer and was able to supply proof of ownership for the items in the form of receipts. Thanks to her insurer replacing the item like-for-like, she quickly received a cell phone of the same model and specifications as the one that was stolen. The perfume bottle and the lipstick were settled at the market value, a financial contribution to help her buy the same products again.
Tama was driving home when he realised his Samsung S8 was missing. He’d last seen it at a gas station and suspected he’d left it on the car roof while refuelling. When he retraced his steps, the phone was nowhere to be found. As it was covered by his policy, he lodged a claim with his insurer, who replaced his phone like for like. This means that the replacement was selected by matching the key features of his original phone—size, display technology, processor, RAM, and storage. Because the S8 was released in 2017, the latest S-series models were far more advanced and not considered comparable, so he was given a Samsung A-series phone with specifications closer to his original device.
Key summary
Different insurers have different types of contents products. At AA Insurance our contents policies are settled by repairing or replacing like-for-like where possible. This means that, if something you own that is covered under your insurance policy is damaged beyond repair, the item will be replaced with a new one or with the nearest available equivalent. While most items will be replaced like for like, certain items will be settled at the market value, such as clothing, footwear, cosmetics and items that don’t have a nearest equivalent item available.
Any questions?
Now’s a great time to review your insurance. We recommend checking your details are up to date and ensuring the policy and cover you’ve chosen is right for you and your insurance needs.
If you have any questions about your insurance, need to update your AA Insurance policies or would like a quote, don’t hesitate to contact us. You can find our opening hours and ways to get in touch with us on our contact page.
This blog provides general information only and is not intended to be a recommendation or personalised financial advice. Excesses, terms, conditions, limits and exclusions apply to AA Insurance Limited’s policies. Please check the policy wording for details of cover. The provision of cover is subject to the underwriting criteria that apply at the time.