Zero Depreciation Car Insurance
In a zero depreciation policy the insured gets the total cost of the damage or loss that is caused to the insured car. The depreciation value of the replaced or damaged parts is usually deducted at the time of claim, but with ‘zero-dep’ policy one can claim the full amount.
Usually, it applies to vehicles that are less than 5 years of age. It can be availed twice during a policy term.
What Does Zero Depreciation Car Insurance Policy Mean?
Zero depreciation meaning – If you have nil depreciation cover then you can claim the total cost of replacement of car parts in case of accidental damage. The depreciation value of the damaged parts won’t be deducted from the claim amount. Thus, it helps you save a huge amount.
Should You Opt for Zero Depreciation Car Insurance Cover?
If you have recently purchased a car or have a relatively new car then it makes sense to opt for a Zero depreciation car insurance policy. Or for the following reasons:
- Owners of luxury cars
- New drivers
- Driving in accident-prone areas
- If your car spare parts are expensive
- If you want to reduce out of pocket expenses
Benefits of Zero Depreciation car insurance policy?
- It helps in reducing out-of-pocket expenses to almost zero without deduction the depreciation on the parts of the car, that is why it is called as a nil-depreciation policy
- It protects from financial loss and compensates the full repair or replacement amount
Zero Depreciation Car Insurance Vs Comprehensive Coverage
Table with the basic difference between car insurance policy with zero depreciation car insurance policy and a basic comprehensive car insurance policy -
|Features||Zero Depreciation||Comprehensive Insurance|
|Claim Amount||Covers total loss or damage without deducting the depreciation||Depreciation of the car parts is deducted from the IDV|
|Age of the car||Up to 5 years||Up to 15 years|
|Own Expense||Less burden on the policyholder at the time of claim||The policyholder has to bear some of the expenses|
|Cost of Plastic Parts and Repair||Maximum coverage||Comparatively less|
How is Zero Depreciation Car Insurance Premium Determined?
Factors that are taken into consideration while calculating zero dep Car insurance premium-
- Place of Registration – The cost of the premium is higher in all the major cities like Delhi, Bangalore, Mumbai, Chennai, Ahmedabad, Kolkata and Pune as compared to other cities.
- Sum Insured or Insured’s Declared Value (IDV) – It is the current market value of the insured car from which the depreciation is deducted while calculating the premium.
- Engine Type – The premium of vehicles with higher cubic capacity is comparatively higher than those with an engine with lower cubic capacity.
- Installation of accessories – Premium for car accessories and additional features is calculated separately.
- Coverage Type – The rate of premiums also depends on the type of coverage you opt.
- Comprehensive car insurance is likely to have higher premiums than the third-party car insurance.
- Vehicle Age is also taken into consideration.
- Fuel type - Whether it is a diesel, petrol, CNG, electric car, it is an important factor in deciding the premium
- Add-on covers like the personal belongings cover, zero depreciation cover, roadside assistance etc. also decide the premium.
Depreciation in Car Insurance
Insured Declared Value (IDV) is the current market value of the car. It is the maximum Sum Insured that the insurance provider decides after deducting the depreciation cost of the car. The IDV is offered in case of total loss of the car or theft.
Insured Declared Value = (Listing price of the manufacturers – Depreciation) + (Accessories excluded from the listed price – Depreciation)
Deduction Rates that are applicable on replaced parts -
- No deductions on parts made of glass
- 30% deduction on fiberglass components
- 50% deduction on parts made of rubber, nylon, or plastic like airbags, tires, tubes, and batteries
For other parts, the rate of depreciation is as follows:
|Vehicle Age||Depreciation to adjust IDV (%)|
|Less than 6 months||5|
|B/w 6 months and 1 year||15|
|B/w 1 and 2 years||20|
|B/w 2 and 3 years||30|
|B/w 3 and 4 years||40|
|B/w 4 and 5 years||50|
If you do not buy nil depreciation cover then this deprecation value will be deducted from the compensation amount.
How to Get Zero Depreciation Car Insurance Online?
Buying zero depreciation car insurance policy online is a simple process as compared to purchasing it online. Here’s a quick rundown of the online process-
- Submit the insured cars’ make and model in the online claim form
- Select the zero-depreciation insurance option
- Get the zero dep car insurance quotes and premium estimate as per the details provided
- Enter your name, geographical location, contact number, address, etc.
- Make the payment online and car insurance purchase is completed
- Policy can be downloaded as well emailed on the registered id
How to Renew Zero Dep Car Insurance Online?
Car insurance renewal is a simple and hassle-free process, especially if it is done online. Let’s see how it is done -
- Keep a track of the renewal date - The insurer or the policy aggregator usually sends a reminder over a call or email. It is recommended for the policyholder to keep a record of the same so that the policy is renewed before the due date.
- Enter the required policy details - While renewing zero depreciation car insurance online, there is no need of running from pillar to post for any paperwork, cheque submission etc. It can be done online on Policy Bazaar’s website by clicking on the policy renewal option. One just needs to choose the existing or new customer option, to begin with, the process.
- Follow the instructions - Submit all the required details, fill the form and click on the payment option
- Make the payment online - Payment to the insurance company can be done online using a debit or credit card.
- Renewal - The insurer will send an acknowledgement of the zero depreciation car insurance renewal on your registered email id and phone number.
Claim Settlement with Zero-Depreciation Car Insurance Policy
At the time of claim settlement, the depreciation on your car parts which mentioned on the policy wordings. As mentioned above you need to pay 50% depreciation on nylon, plastic, rubber parts including batteries, 30% on fibre glass components, and 5-10% on wooden parts and so on.
In the case of basic car insurance plans, the insurer only reimburses the loss after deduction of the depreciation value of the replaced parts, unlike a nil depreciation car insurance policy.
Now that you are aware of the benefits of a zero-depreciation car insurance, you can buy it as an add-on, why not go ahead and buy it.
Zero Depreciation Car Insurance FAQs
Ans: Zero-dep cover helps in reducing car insurance premium significantly. The expenses pertaining to voluntary deductibles and depreciation of car parts is paid by the insured at the time of claim.
But with this add-on, you are entitled to claim the full amount of sum assured. Depreciation on car parts will not be deducted (except the tubes and tyres). If your car is new then nil-depreciation cover is highly recommended for you.
Ans: Yes. No Claim Bonus or No-Claim-Discount is accrued to the insured’s account every year or not making a single claim during the policy term. For every claim free year, the No-claim-bonus is accumulated as mentioned in the table below -
Claim Free Years No-Claim-Bonus (%) 1 year 20 2 years 25 3 years 35 4 years 45 5 years Up to 50%
Ans: IDV is equal to the sum assured value that the policyholder gets in case of theft or total loss of the insured vehicle. It is the current market value of the vehicle minus the vehicle registration cost and depreciation value of the vehicle parts.
Ans: Usually, it is valid for cars up to 5 years. However, some insurers provide it car older than 5 years as well.
Ans: It mainly depends on the age of the car to be insured, its make and model, as well as the geographical location.
Note: This is your car’s recommended IDV as per IRDAI’s depreciation guidelines.asdfsad However, insurance companies allow you to modify this IDV within a certain range (this range varies from insurer to insurer). Higher the IDV, higher the premium you pay.Read More