This paper proposes a new block replacement policy for a group of nominally identical units. Each unit is individually replaced on failure during a specified time interval. Beyond the failure-replacement interval, failed units are left idle until a specified number of failure occurs, then a block replacement is performed. The average cost rate for this 2-phase block replacement policy is derived and analyzed. The policy yields lower cost rate than the other two block replacement policies published previously. Numerical examples demonstrate the results.