What is Covered Under a Zero Depreciation Car Insurance Policy?

Imagine damaging your car and having to pay a huge amount from your pocket. If this sounds unfair, it is better to have a zero depreciation policy. This type of policy covers damages without deducting any depreciation cost while settling an accidental claim. This article explains what a zero depreciation car insurance policy covers, its benefits, and things to consider while buying a zero depreciation add-on with your standard own damage car insurance.Read more

Coverage Under Zero Depreciation Car Insurance

The zero-depreciation car insurance, or bumper-to-bumper insurance, provides you with complete protection without considering the depreciation of your vehicle or its parts. It is an add-on with your comprehensive motor insurance. Here is what is covered under this a zero dep add on:

• Plastic, Rubber & Nylon Parts: Covers bumpers, trims, interior panels, clips, and other plastic or rubber components without any depreciation deduction.
• Fibreglass Components: Fibreglass body parts are fully covered under zero depreciation insurance.
• Metal Parts: Doors, bonnet, fenders, and other metal body parts are also covered without depreciation.
• Accident-Related Damages: Covers accidental damages due to collision, overturning, etc.
• Natural Calamities: Losses caused by flood, earthquake, cyclone, storm, or landslide are covered.
• Man-Made Disasters: Covers damages due to fire, riot, vandalism, strike, or malicious acts.

What is not Covered under Zero Depreciation Car Insurance?

Check out some of the exclusions of car insurance with the zero depreciation add-on below:

• Mechanical and electrical failures are not covered.
• Regular wear and tear is not covered
• Damages occurring while driving under the influence of alcohol or drugs are not covered
• Claims will be rejected if the driver does not hold a valid licence
• Consequential losses are not covered.

Things to Keep in Mind While Opting for Zero-Depreciation Car Insurance

Here is what you should keep in mind while opting for a zero depreciation car insurance:

• Zero-depreciation car insurance is an add-on cover also known as 'nil depreciation' or 'bumper to bumper' cover.
• This add-on is only available with comprehensive car insurance at an additional premium.
• This add-on offers 100% claim amount for all parts, except for tyres, tubes and battery costs that are covered at 50%.
• You can only claim a specific number of zero depreciation claims as per your insurer. Several insurers may allow only 2 zero dep claims in a policy year, whereas all other claims will be settled as per the comprehensive policy.

Why Opt for a Zero Depreciation Policy?

Here are some of the common benefits of a zero depreciation car insurance:

• Provides financial coverage for any damage or loss caused by an accident.
• It enhances your standard car insurance and reduces the cost of damaged body parts to zero.
• The depreciated value is not considered when providing cover for the incurred expenses after repairing or replacing the damaged part of the car.
• At a nominal premium, you can save a significant amount

How Does Zero Depreciation Car Insurance Work?

Let us give you an example of how much you will have to pay for the damaged parts and its depreciation. Assuming your car is worth Rs. 15,00,000 and has incurred 20% depreciation. If the car meets with an accident and the total cost of replacing damaged parts comes to ₹50,000.

Let us compare the claim settlement under a standard comprehensive policy and a zero depreciation policy.

*Disclaimer: The above-mentioned figures are assumed as the actual cost will depend upon the severity of damage caused to the car and how much depreciation cost is applied by the insurer.

Under a standard car insurance policy, the insurer deducts depreciation on replaced parts, which means the policyholder has to pay ₹10,000. However, with a zero depreciation add-on, the insurer is not liable to deduct depreciation. This add-on ensures the full claim amount and clearly shows how a zero-depreciation cover helps reduce out-of-pocket expenses and maximises claim settlement, making it an ideal add-on for new cars and expensive vehicles.

Conclusion

Now that you know almost everything about this add-on in car insurance, how it works, and how much you can save with zero depreciation in case of an accidental claim, it is recommended that you consider opting for this add-on when purchasing a motor insurance for your car. It is also advised that you buy car insurance online since it is hassle-free, takes a few minutes, lets you compare different plans in one place, and also allow you to calculate the premium rates of your desired policy.