How are claims for durable goods typically resolved?

When handling claims for durable goods, the principle of "new for old" is commonly applied. This approach means that when a durable item, like appliances or furniture, is damaged or lost, the insurer replaces it with a brand-new item of similar kind and quality rather than merely compensating for the item's depreciated value. This method is designed to ensure that the insured party does not suffer a financial loss due to the degradation of their property over time.

Using "new for old" can be particularly beneficial for policyholders, as it provides them with a sense of restored value and utility, effectively replacing their lost or damaged items with functioning equivalents that might be superior in performance compared to the old versions, which could have aged or become obsolete. This is especially relevant in the context of insurance claims where the goal is to restore the insured party to their original financial position prior to the loss, rather than applying depreciation deductions that could undervalue the claim.

In contrast, other methods such as "repair for wear and tear" or "actual cash value assessment" involve compensating based on the current condition or depreciation of the item, which may not provide the same level of satisfaction or financial coverage to the policyholder.