How a Zero-Dep Insurance Policy Benefits You During Claims

The Motor Vehicles Act, 1988, makes Third-Party Insurance mandatory for motor vehicle owners plying on the public roads. Motor Insurance covers the costs and the legal liability you cause to the third-party in times of an accident. This may include any physical injury, death, or damage caused in times of an accident. The third-party cover may not include any repair of damage to your motor vehicle or yourself but to third-party.

Read more

Stay home & renew car insurance in 2 minutes

No documents required
Get Car Insurance starting
@ only 2072/year*
  • Save up to 80%* Lowest Car Premiums

  • 20+ Insurers To Choose From

  • 25 Lakh+ Vehicles Insured

*TP price for less than 1000 CC cars. All savings are provided by insurers as per IRDAI approved insurance plan. Standard T&C apply.

A Car Insurance policy often comes with a comprehensive bundle and an add-on package from different insurance companies, each screaming of its benefits and allowances. However, a careful assessment and personal discernment have to be exercised on the part of the policy buyer before zeroing in on any car insurance policy.

Your Car and Depreciation

Depreciation is an important aspect of any physical asset and the assessment of its value. Depreciation is the continuous loss in the recorded value of an asset over a while. The monetary value of an asset may decrease due to wear and tear, damage or the product becoming obsolete. Your car is also no exception. The value of your car also starts decreasing the moment it leaves the showroom. This reduction in the value comes because of the fluctuating values of the component material like steel, iron, plastic, etc.

In case of damage or an accident, when you file an insurance claim, the insurance company will first assess the depreciated value of your car because of the damage caused.

What is a Zero-Dep Insurance Policy?

Since the value of a motor vehicle depreciates over time, in case of an accident, the policy owner may not be able to recover the full amount of the vehicle. The general motor insurance plans will only pay a calculated amount minus the depreciated amount. The difference of the amount has to be paid by the policy owner.

In case of a Zero-dep Insurance cover, you can claim maximum reimbursement at the time of claim. As the name suggests, such kind of motor insurance plans provides a comprehensive cover without depreciation deductions. For example, if your motor vehicle gets damaged in an accident and you do have a Zero-Dep Insurance cover; your insurer will cover the entire cost at the time of claim.

Types of Motor Insurance Plans

  • Normal or General Motor Insurance -This is the regular motor vehicle insurance where at the time of insurance claim, the payoff amount is based on the current value of the vehicle, which is estimated after deducting depreciation costs.
  • Zero Dep Motor Insurance- This insurance cover promises maximum reimbursement or full settlement amount without depreciation cost deductions.

Features of a Zero Dep Insurance Cover

  • It is also known as Nil Depreciation Insurance or Bumper to bumper insurance cover.
  • It gives a complete insurance cover with a full settlement amount without depreciation.
  • The insurance company bears the entire cost of the settlement.
  • Its premium is 15% to 20% higher than the premium for a normal insurance cover.
  • It is preferable for new cars or cars for less than three years old.
  • It is recommended for owners of luxury cars or those who drive cars in high-risk zones so that the full settlement amount is ensured at the time of claim.
  • The Zero Dep premium is dependent on the age, model, and location of your motor vehicle.
  • This type of insurance is favorable for people with new cars, luxury vehicles, or cars with relatively costly repair parts or those who stay and drive cars in risk or accident-prone areas.

Difference between General Insurance and Zero Dep Insurance Cover

Type of Insurance


Cost of Repair

Claim Settlement

Vehicle Age



Less cost

Only part payment by the insurance company, the owner has to pay more

Claim amount has depreciation deductions as well

Can be taken for vehicles that are more than five years of age

Zero Dep Insurance

15%-20% higher cost

The insurance company pays the maximum amount

Claim amount excludes depreciation factor

Up to 5 years or new vehicles

Benefits of taking Zero-Dep Insurance Cover

  • In case of damage to your vehicle in an accident or road mishap, your Zero-Dep Insurance cover will help you retrieve the entire cost of a settlement.
  • Since the insurer will cover the entire settlement amount as depreciation is not counted in the claim, it will help you save a lot of out-of-pocket expenses.
  • It adds more intrinsic value and benefits to your vehicle insurance.
  • It adds to your peace of mind as it saves a lot of money and energy at the time of claim settlement in case of a road mishap.

Who Should buy Zero-Dep Insurance Cover?

  • Owners with new and expensive vehicles
  • Relatively new drivers who may be prone to accidents
  • People living in high road risk or accident-prone areas
  • If a vehicle has expensive spare parts

Only new car owners don't need to buy Zero Dep Insurance cover. It is a good add-on to purchase for any car-owner if he/she can support the slightly higher premium. Also, if the car is older than five years, it is not a cost-effective option to shell out an extra premium for an aging vehicle.


Written By: PolicyBazaar - Updated: 15 July 2021
You May Also Like
  • Transferring Car Insurance from One Person to Another

    Transferring Car Insurance from One Person to Another In the current economic climate that encourages consumers to “reduce, reuse and recycle”, it is becoming increasingly common for people to purchase second-hand...

    read more
  • 9 Secrets That Your Motor Insurance Provider Won’t Tell You

    9 Secrets That Your Motor Insurance Provider Won’t Tell You Due to the dangerous driving conditions, it is compulsory to have third party insurance for every vehicle plying on Indian roads. It ensures the overall saf...

    read more
  • Money Saving Advice for All Car Owners

    Money Saving Advice for All Car Owners After a dream home, a dream car is your second-largest purchase that you make in your lifetime. But the expense does not cease when you drive off the car dealer's lot. Read mor...

    read more
  • Difference Between Comprehensive Insurance and Third Party Insurance

    Difference Between Comprehensive Insurance and Third Party Insurance Comprehensive insurance is insurance coverage that pays for the repair or replacement of vehicle damages resulting from an incident. Comprehensive ca...

    read more
  • Types of Motor Insurance

    Types of Motor Insurance The word Motor broadly covers a lot of classes of vehicles plying on the roads. These may be two-wheelers like scooters and motorbikes, three-wheelers or four wheelers like private cars, jeeps, ...

    read more
Car insurance save up to 80
Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.
Calculate your car IDV
IDV of your vehicle
Calculate IDV
Calculate Again

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.

Policybazaar lets you compare premium prices from 20+ Insurers!
Compare Prices
Car Insurance Renewal

Car insurance articles

Recent Articles
Popular Articles
Driver and Passenger Cover in Car Insurance

29 Nov 2021

While driving, it is easy to get distracted, especially, during...
Read more
Is Cashless Car Insurance Beneficial for Car Owners in India?

24 Nov 2021

With the advancement in technology, car insurers have also evolved...
Read more
Things to Know About Total Loss Car Insurance Claim Process

22 Nov 2021

Imagine you have raised a claim after your car gets damaged in an...
Read more
Car Depreciation Calculator In India

20 Nov 2021

Are you planning to purchase a new car or sell your old one? It...
Read more
Documents Required for Car Insurance Renewal in India

19 Nov 2021

Driving on public roads poses a threat to the driver's life and...
Read more
Getting Your Duplicate Car Insurance Policy is Easy-Here’s How!
Insurance offers much-needed financial protection in case of a crisis. When vehicle insurance is mandatory in India...
Read more
Transferring Car Insurance from One Person to Another
In the current economic climate that encourages consumers to “reduce, reuse and recycle”, it is becoming...
Read more
How to Check Car Insurance Status Online on Parivahan Sewa/ RTO?
In India, buying car insurance is a compulsion for every car owner. It doesn’t matter if you are an excellent...
Read more
Multiple Ways To Check Your Car Insurance Status Online
Keeping a check on your car insurance policy is as important as purchasing a comprehensive insurance policy for...
Read more
Difference Between Comprehensive Insurance and Third Party Insurance
Difference Between Comprehensive Insurance and Third Party Insurance Comprehensive insurance is insurance coverage...
Read more