Own-Damage vs Zero Depreciation Car Insurance
Car insurance companies offer various types of car insurance policies.Read more
What is Own Damage (OD) Car Insurance?
An own-damage car insurance policy offers coverage for damages incurred due to road accidents, natural calamities, strikes, riots, theft, etc. It does not cover third-party liabilities, person and property damage. You can only buy an OD cover with the mandatory third-party insurance.
Policyholders can also purchase different add-ons with their car insurance to enhance the protection of their motor insurance policy. Popular add-ons, such as retun to invoice, consumables cover, etc., can help you cover uninsured items of your vehicle at an additional premium.
As per the IRDAI regulations, every car insurance company sells a bundled car policy that offers 3-year third-party and 1-year own damage cover. This bundled motor insurance policy has been made mandatory for every car purchased after 1st September 2018.
What is Zero Depreciation Car Insurance?
A zero depreciation car insurance or a zero dep cover is an add-on available with own-damage or comprehensive car insurance. It is also known as bumper-to-bumper insurance or a nil-depreciation cover.
With this car insurance add-on, the insurance company does not deduct any depreciation cost on repaired and replaced parts during an accidental claim. Every year, your vehicle depreciates in value, which insurers deduct while settling claims. However, with the zero depreciation cover, you are entitled to a better claim amount without any deductions related to wear and tear of your vehicle.
The amount of depreciation on different car parts is calculated based on the rates proposed by the IRDAI, which are as follows:
- On rubber, nylon, plastic parts, and batteries: 50% depreciation
- On fibreglass components: 30% depreciation
- On wooden parts: 5% in the first year, 10% in the second year, and so on
A zero-dep add-on can be purchased by paying an additional premium only with a comprehensive and own-damage policy. However, a nominal increase in the premium leads to massive savings during a claim.
Please note that this add-on is not available with the third-party insurance.
What is the Difference Between Zero Depreciation and Own Damage Car Insurance?
A zero dep add-on cover and an own-damage car insurance policy are two different terms used in a motor insurance policy. However, both of them provide completely different benefits.
Let us understand the difference between own damage insurance and zero depreciation cover more clearly with the help of the following table:
| Point of Difference |
Zero Dep Cover |
Own Damage Insurance |
| Type |
Add-on cover |
Standalone policy |
| Car Insurance Premium |
Slightly higher than normal |
Lower than that of a car policy with zero dep add-on cover |
| Inclusions |
Includes the depreciation borne by the insured car and its parts |
Does not include the depreciation borne by the insured car |
| Claim Amount |
Higher claim amount as the depreciation amount is added |
Lower claim amount as the depreciation is not included |
| Best For |
New cars, luxury and high-end models |
Old car owners, budget-conscious policyholders who need a bare minimum coverage |
Wrapping Up!
Own-damage car insurance may or may not include a zero-depreciation add-on, as this depends on the policyholder. If your car is not older than 5 years, you can consider purchasing a zero-depreciation add-on with your car insurance policy. You may pay a higher premium initially, but your car will be covered for depreciation based on its age, helping you save more on claims.
You can also use a premium calculator to compare the cost of your car insurance with and without the nil depreciation add-on cover on Policybazaar.com.
