How is Own Damage Different from Zero Depreciation Car Insurance?

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Before purchasing a car insurance policy, you must be aware of the extent of coverage you want for your car. In this context, two terms 'own damage' and 'zero depreciation' are used most commonly. Let us know everything about own damage & zero depreciation car insurance and how they are different from each other.

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          What is Own Damage Car Insurance?

          An own-damage car insurance policy covers a car owner against own damages sustained by the insured car due to unforeseen events like a road accident, natural calamities, strikes, riots, theft, etc. It can be purchased along with a third-party liability car policy to cover the own damages sustained by the insured car.

          Purchasing third party car insurance is compulsory as per the motor laws of India. Own damage car insurance enables you to separately purchase this cover to get compensation for the car’s own damages, provided you already have a third party liability policy.

          As per the IRDAI regulations, every car insurance company has started selling a bundled car policy that offers 3-year third party plus one-year own damage cover. This bundled motor insurance policy has been made mandatory for every car purchased after 1st September 2018.

          An own damage cover can also be availed under a comprehensive car insurance policy. A comprehensive motor insurance policy offers a wider coverage by covering both third party liabilities and own damages to the insured car.

          What is Zero Depreciation Car Insurance?

          A zero depreciation car insurance or a zero dep cover is basically an additional cover that a policyholder can purchase along with his/her comprehensive motor insurance plan. Also known as nil depreciation cover, it provides coverage for depreciation borne by the insured car and its parts over the years.

          Usually, a standard motor insurance policy excludes general wear and tear of the car i.e. depreciation sustained by the insured car over the years. However, by purchasing a zero dep add-on cover, you can overcome this exclusion and get the depreciation covered by the insurance company at the time of claim settlement. In such a scenario, the insurance company will include the amount of depreciation of the car and its parts in the claim amount.

          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%
          • On fiberglass components: 30%
          • 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 some extra premium amount over the existing car insurance price. Besides, this add-on cover can only be availed with own-damage vehicle insurance or a comprehensive motor insurance cover and not under third party insurance.

          What is the Difference Between a Zero Dep 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.

          A zero depreciation is an additional cover that policyholders can purchase along with their own damage or a comprehensive car policy only. This add-on can be purchased by paying some extra premium amount to cover the depreciation sustained by the insured car as per its age.

          On the other hand, you can get own damage cover separately for your car only if you have an existing third party liability insurance cover. An own damage cover is also offered under a comprehensive car insurance policy as it provides coverage for both third party liabilities and the car’s own damages. It depends on you whether you want to add a zero depreciation cover with your vehicle insurance policy or not.

          You May Also Read: Everything About Third-Party Liability Insurance

          Own Damage Insurance Vs Own Damage Insurance with Zero Depreciation Cover

          Let us understand the difference between own damage insurance and own damage insurance with zero depreciation cover more clearly with the help of the following table:

          Point of Difference Own Damage with Zero Dep Cover Own Damages Without Zero Depreciation Cover
          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

          Wrapping Up!

          Own-damage car insurance may or may not include a zero depreciation add-on under its coverage as it completely depends on the policyholder. If your car is 5 years or older than 5 years, you can consider purchasing a zero depreciation along with your car insurance policy. You may be paying a higher premium initially but your car will be covered against any depreciation sustained by it as per its age.

          You can also separately compare the cost of nil depreciation add-on covers by comparing multiple car insurance plans on

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