What are the two options for settlement of household claims for irreparable items?

The correct answer focuses on the specific principles of household insurance claims, particularly for items deemed irreparable. "New for old" refers to a settlement method where the insurer replaces a damaged item with a brand new one, regardless of the wear and tear that the original item may have had. This approach is beneficial to the policyholder, ensuring that they receive a product of equivalent functionality and quality, which is especially important for essential household items.

Indemnity, on the other hand, is a principle in insurance that aims to return the insured to their financial position prior to the loss, implying that the amount paid out can be influenced by factors like depreciation. This method does not typically apply when it comes to household items, especially those that are irreparable, as it might not adequately address the need for equivalent replacement value.

In the context of household insurance, when items cannot be repaired, "new for old" becomes the preferred option because it guarantees that claimants are not left at a disadvantage due to a loss. The concept of indemnity does play a role in insurance but is not as directly applicable for items considered beyond repair. Thus, the combination of "new for old" and "indemnity" correctly encapsulates the options available for settling claims