US insurance giant Liberty has stepped up competition in the motor cover market by offering to replace a car with a newer one if it is written off.
The option, from the insurer that took over Quinn Insurance, will come as part of the comprehensive cover.
Liberty said yesterday that it was the first in the market to offer this innovation, with the move signalling the intent of the Boston-based company to build its market share in the higher end of the motor insurance market.
Insurance experts said the move to effectively pay out more than a customer's car is worth would put pressure on other insurers to offer more to their customers.
Comprehensive cover represents 80pc of the motor insurance market.
Chief executive of the Irish operation Patrick O'Brien said the new "better car replacement" add-on to comprehensive cover would mean that if a policyholder's car is damaged beyond repair, their car will be replaced with the same model car but one year younger and with 15,000 fewer kilometres on the clock.
Mr O'Brien said there would be no extra cost for the replacement feature on comprehensive cover. He said that if a car is stolen and not recovered the insurer waits 21 days before settling the claim. Stolen cars would be covered under the replacement deal.
He gave an example of a 2008 Volkswagen Passat with 70,000km on the clock, valued at €10,000. If the car is written off it could be replaced with a 2009 Passat with 55,000km on the clock, valued at €12,000.
Liberty had 2,500 of the cars it insured last year written off.
Mr O'Brien said the new car replacement enhancement to the comprehensive cover was just the first in a number of new products Liberty was due to release.
Head of general insurance at the Irish Brokers Association, Brian McNelis, said the massive muscle of Liberty would shake up the sleepy motor cover market.
Quinn had previously gone heavily after young drivers in an attempt to build market share.
It has now reduced its premiums for comprehensive cover, while brokers said it was less competitive for younger drivers.
The US group, which has assets of €85bn, bought the insurance company out of the ruins of the collapsed Quinn Group business empire under a partnership deal with the Irish Bank Resolution Corporation -- the former Anglo Irish Bank.
The collapse of Quinn Insurance could leave all Irish policyholders footing a bill for close to €1bn. The news means consumers face paying the 2pc Quinn Insurance levy on all general insurance policies for more than 15 years to cover the cost of Quinn's hefty losses.