Bumper to bumper insurance, nil depreciation or zero depreciation is a type of car insurance policy that offers complete coverage to your vehicle irrespective of the depreciation on its parts. So, when there is a loss or damage caused to your vehicle after an accident, the insurer will not deduct the depreciation value from the coverage amount (excluding car batteries and tyres). The best part is that your motor insurer will pay the entire cost of replacing the vehicle’s body parts.
Bumper to bumper car insurance or full-body insurance provides full coverage for all rubber, fibre, and metal parts of your car without deducting the depreciation value. However, it will not cover engine damage resulting from oil leakage or water ingression. Any expenses incurred on mechanical breakdown, consumables or oil change are also not covered. Also, there are limitations on the number of claims that you can file in a year.
The zero-depreciation cover has its advantages over a basic comprehensive car insurance policy.
But there are no free lunches, right?
Every good thing has a cost attached to it and so does nil depreciation cover. A car insurance policy with zero depreciation rider benefit will cost nearly 20 per cent more than a no-frills car comprehensive policy. This means that you are paying a higher premium to make sure that you don’t have to chip in during your car insurance claim settlement in the future. Simply put, you are paying in advance towards those future depreciation costs.
For those who are seeking an affordable motor policy, this could be a deal-breaker. But at the same time, it will lure customers who are willing to pay higher premium rates to ensure their peace of mind.
Zero depreciation add-on cover is most suitable for people with luxury cars, new cars, car models with expensive spare parts, or people residing/driving in accident-prone areas. You can also buy bumper to bumper insurance after 5 years or 7 years for older cars.
Let’s check out what are the key features of zero depreciation/ nil deprecation/ bumper to bumper insurance:
Having nil depreciation or zero depreciation cover in your car insurance policy would mean full compensation for any car loss/damage at the time of claim settlement. The amount is certainly more than the amount reimbursed under a comprehensive car policy. This is because the claim amount in a comprehensive car insurance policy will be paid based on the current market valuation of the car after adjusting the value of depreciation.
Moreover, there will be certain costs that the car owner would need to pay from his/her own pocket for the repairs. On the other hand, in a zero-depreciation policy, you will get the entire expenses covered under the claim amount.
For instance: If your car (hatchback) was damaged and the cost of the repair was Rs 40,000, then you might have to pay anywhere between Rs 20,000 to Rs 25,000 from your own pocket for depreciation on metal/plastic parts. This is not the case in a zero-depreciation policy as the insurer will cover the full repair amount depending on the IDV (Insured Declared Value).
A zero-depreciation add-on cover is priced at least 20 to 30 per cent higher than a basic comprehensive car insurance policy. It does not provide coverage for tyres, tubes and batteries of the car. Besides, this cover is only available with comprehensive four-wheeler insurance plans for cars up to 5 years old. Moreover, there is a limitation on the number of claims that you can file during a policy term to get the full claim benefits.
Here is a brief comparison between a comprehensive car insurance policy and a policy with zero depreciation rider benefit:
|Zero-Depreciation/Bumper to Bumper Insurance||Comprehensive Car Insurance|
|This is available as an add-on benefit, for which you will need to pay an extra premium.||The premium amount is lower than a bumper-to-bumper policy.|
|Compensation is provided for the full cost of repairs for external car body damages regardless of the depreciation value.||The compensation amount excludes the depreciation value of the car parts.|
|The insurance company pays for the replacement/repairs/ replacement of the fibre and plastic components of your car.||You make the partial payment for the replacement/repair of the plastic, metal, or fibreglass components of your car.|
Car depreciation comes into play at the time of renewal or claiming of your policy. But before we delve into that, let’s know what is depreciation and how does it influence your car insurance claim.
Every vehicle tends to lose its value with time. The moment it is out of the showroom, the value gets down up to a certain percentage. Moreover, the regular wear and tear of all the parts of the vehicle lead to depreciation.
Depreciation plays an important role at the time of deciding the car insurance premium. To decide the premium, the insurer needs to arrive at the actual value of the car. By deducting the rate of depreciation, the insurer calculates the IDV, up to which an insured is compensated.
The Indian Motor Tariff has a fixed rate of depreciation to be applied on car parts and accessories considering which the insurers decide the IDV or settles a claim under comprehensive insurance. The rates are as given below:
|Car Parts||Rate of Depreciation|
|Parts that are prone to high wear and tear, including plastic parts, rubber/nylon parts, batteries, tyres and tubes etc.||50%|
|Parts made of glass or fibreglass||30%|
|Metallic car parts||0-5%|
So, in case of a claim, the insurance provider compensates only up to the IDV after applying the depreciation rate to the damage caused to a particular car part.
No doubt, there is a difference in the actual market value of the new parts and the depreciated parts. Hypothetically, this deference is borne by the policyholder at the time of claim.
Here is why bumper to bumper insurance for the car is one of the most sought-after insurance products in India and why you can consider it along with the basic cover:
In the event of an accident or total loss like theft, the only thing that comes to your mind is to claim your car insurance policy. You will be relieved thinking that the insurer will compensate for the full value of your car. But in the end, you come to know there is a huge portion of the repair or replacement cost due on you. Why?
Well! This is because:
Hence, consider zero depreciation cover and stay protected!
Even bumper to bumper insurance is not free of limitations. The policy becomes null and void under certain circumstances, such as:
Bumper to bumper insurance cost is decided at the time of purchasing the policy. The insurer decides the cost of zero depreciation cover by considering the below factors:
However, one can check the premium before buying the policy using a bumper to bumper car insurance calculator.
In order to get the right type of car insurance, you must excel the ability to select the right insurer first. With plenty of insurance companies, it might be confusing the land on the right one. Having said that, here’s a list of top insurance providers that offers comprehensive coverage for your car with an add-on option of nil depreciation cover:
Disclaimer: Policybazaar Insurance Brokers Private Limited does not endorse, rate, or recommend any particular insurer or insurance product offered by an insurer.
Bumper to bumper insurance coverage can be bought online on Policybazaar.com. The process is similar to buying a comprehensive insurance cover. The only difference is you can add this cover before paying the premium for your selected amount. You can also opt for this add-on cover at the time of policy renewal if you have not bought it together with the basic motor policy.
While buying, compare the best bumper to bumper car insurance plans available online first. If you find a suitable option, pay the premium online using your credit or debit card or through net banking. The transaction is secured through an online payment gateway, which keeps your details confidential. Your car policy will be issued in less than 5 minutes.
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