Difference Between Zero Depreciation and Comprehensive Car Insurance Policy
Choosing between comprehensive car insurance and zero depreciation (zero dep)Read more
What is Comprehensive Car Insurance?
As the name suggests, a comprehensive car insurance policy offers broader coverage to the policyholder. Under this car insurance policy, the insurance company compensates the policyholder against third-party liabilities and own damages arising out of the insured car. Own damages include damages sustained by the insured car due to unforeseen events like accidents, collisions, earthquakes, strikes, fire, theft, etc.
On the other hand, third-party liabilities include third-party death, injury and property damage due to the insured vehicle.
What is Zero Depreciation in Car Insurance?
A zero depreciation cover is basically an additional cover that you can add to your comprehensive car insurance policy.
Also known as Nil depreciation or Bumper to Bumper insurance, this add-on provides coverage for the depreciation sustained by the insured four-wheeler. Generally, a standard comprehensive car policy does not cover any depreciation borne by the insured car.
However, with the help of this add-on, you can get compensated for any depreciation as per the rates set by the IRDAI. It covers all parts of a vehicle including plastic parts, rubber, nylon parts, batteries, tyres, tubes, airbags and fibreglass components.
Zero dep car insurance is very beneficial for new cars. It can be purchased along with a comprehensive car insurance plan by paying some extra premium.
Quick Comparison Between Comprehensive Car Insurance and Zero Depreciation
To understand which insurance is better for your car, whether comprehensive or zero depreciation, have a look at the major differences between both the options:
| Point of Difference |
Comprehensive car insurance with zero dep cover |
Comprehensive car insurance without zero dep cover |
| Premium |
Higher than a standard comprehensive policy |
Lesser as it does not include zero dep |
| Coverage |
Covers depreciation borne by the insured car along with own damages and third-party liabilities. |
Only covers own damages and third-party liabilities arising out of the insured four-wheeler. |
| Compensation Received |
Compensation received is higher as it also compensates for depreciation borne. |
Lesser compensation as depreciation is not included. |
| Age of Car |
Depends on the insurer but is usually given for cars upto 5 years old. |
No age limit of the car |
| Repair of Plastic Parts |
No depreciation is considered when repairing plastic parts of a car |
50% depreciation cost is considered when repairing plastic parts |
As soon as a car comes out of the showroom, its value starts to depreciate. Thus, to cover this depreciation, a car owner can purchase zero dep cover along with his/her comprehensive car insurance policy. Thus, it is an additional cover and only covers the depreciation of a car.
Common Exclusions in Zero Dep and Comprehensive Car Insurance
Even if you buy zero-dep add-on with comprehensive car insurance, you are not covered for the following:
- Replacement of items like oil, grease, nuts, bolts (unless you have a separate consumables add-on cover) due to accidental damage
- Any damage to the insured car due to regular wear & tear or mechanical/electrical failure.
- Damages occurring while driving without a valid driving licence or under the influence of alcohol or drugs
- Consequential loss resulting from an initial accident, such as engine seizure from driving after oil leakage or trying to start a water-clogged car.
Which One Should You Opt For?
- A standard comprehensive car insurance policy might be sufficient if your car is above 10 years of age and you want an economical coverage.
- Having a zero dep add-on to comprehensive policy is better if you want maximum claim benefits and minimum out-of-pocket expenses (especially for a new or expensive car).
Note: Zero dep cover cannot be purchased as a standalone coverage, it must be bought with a comprehensive car insurance policy.
Wrapping Up!
Opting for a zero depreciation cover to your comprehensive car insurance significantly increases your claim settlement amount. While the premium amount is a bit higher with zero dep cover, it provides a more extensive financial protection and peace of mind. This is particularly beneficial for repair costs involving parts where depreciation is normally deducted.
