Replacement value compensation (in German: Neuwertentschädigung) is a clause in property insurance that pays for damaged or stolen items at the new price, not only at their lower current value. It is mainly found in contents insurance and usually requires that you actually replace the item within a set time limit.
Short answer: Replacement value compensation pays for an item at its new price, not only at its current value. Usually you must replace the item within a time limit set in the contract. The exact rules are in the policy terms. Without a replacement, the insurer generally pays only the current value. Last updated: October 2026.
The most important points
- New value is the price of a new, equivalent item. Current value takes age and condition into account.
- With a replacement value clause you usually receive more, but only if you actually replace the item.
- The replacement deadline is set in the terms. Read it before you sign.
- Underinsurance can reduce the benefit even with a replacement value clause (section 74 VVG).
- Not every contract includes this clause. Clarify it before you take out cover.
What do new value and current value mean?
New value is the amount a new, equivalent item costs today. Current value takes age, wear and condition into account and is therefore usually well below it. A television that breaks after four years is worth much less at current value than at its new price.
How is the payout calculated?
A worked example shows the difference. Assumption: a television cost 1,000 euros new, its current value after four years is 500 euros, and a new item of the same kind costs 1,000 euros today.
| Situation | With replacement value clause | Current value only |
|---|---|---|
| Item is replaced within the deadline | 1,000 EUR (new value) | 500 EUR |
| Item is not replaced | 500 EUR (current value) | 500 EUR |
The table is simplified and ignores any deductible or reduction for underinsurance. Both can lower the payout further.
Which conditions should you check?
- Deadline: within what period must you replace the item, and how do you prove it?
- Equivalence: what counts as an equivalent replacement?
- Current value payment: in which cases do you first receive only the current value?
- Insured sum: is it high enough so that the new value is not reduced?
- Exceptions: are some items excluded from the replacement value clause?
When does a replacement value clause make sense?
It can be worthwhile if you own valuable items that you would replace soon after a loss. It matters less if your belongings are mostly older and low in value. Weigh any extra premium against the benefit. For an overview of cover at university, see the guide on liability, contents and accident cover (in German).
Frequently asked questions
Do I always get the new price?
No. The new value is paid only if the conditions are met, in particular replacement within the deadline. Without a replacement you usually receive only the current value.
How does this differ from current value compensation?
Current value compensation pays the value of the damaged item. It is usually lower but does not require a replacement. Which rule applies is set out in the contract.
Does the new value clause cover fire, water damage and burglary?
That depends on the tariff and the perils covered. Check the terms to see whether the clause applies to all covered perils.
What happens if I do not replace the item?
You usually receive only the current value. Whether a later top-up is possible is set in the contract, so clarify it before a loss occurs.
Related reading
- Liability insurance in a shared flat or your own flat
- Liability insurance for students: who needs it
- Contents insurance in a dorm or shared flat (in German)
- Coverage limit
Sources: Section 74 VVG, underinsurance, as of October 2026; German Insurance Contract Act (VVG), full text, as of October 2026.
Last updated: October 2026. This guide is general information, not individual advice.
