A zero depreciation cover is an add-on that can be purchased to cover the depreciation borne by the insured car over the years. By purchasing this add-on at an additional premium, you don't have to pay for the amount of depreciation from your pocket at the time of claim.
Most motor insurance providers offer zero depreciation cover for cars up to 5 years old. However, zero depreciation cover for 7-year-old cars is also offered by a couple of insurance providers.
Under a 7-year zero dep cover, the insurance company will cover the amount of depreciation incurred by the insured car for up to 7 years of age. The insurer will compensate you for the amount of depreciation deducted from the value of the car parts to be replaced or repaired at the time of claim settlement.
In other words, zero dep cover after 7 years covers the rate of depreciation on a car of more than 7 years old when you register a claim.
When you purchase a zero depreciation cover for your four-wheeler, the insurer determines the depreciation rate based on the specific rates set by the Insurance Regulatory and Development Authority of India (IRDAI).
For instance, the depreciation percentage for cars aged 5 to 10 years old will be 40%. Thus, if you purchase zero dep cover for a 7-year-old car, the percentage of depreciation applicable when you make a claim will be 40%.
Here is a table stating the rate of depreciation based on the age of the car:
|Age of the vehicle:
|Rate of depreciation:
|Below 6 months
|Between 6 months and 1 year
|Between 1- 2 years
|Between 2- 3 years
|Between 3- 4 years
|Between 4- 5 years
|Between 5 - 10 years
|Above 10 years
Depreciation on all body parts of the car is not covered under a zero depreciation cover. There are some exclusions as well. Regular wear and tear due to mechanical breakdown are not covered.
Replacement of tyres, consumables and unused parts are also not covered. Damages arising due to nuclear and warlike perils are also excluded. Moreover, total loss or theft of vehicles is also not covered under zero depreciation cover for 7-year-old cars.
If you are planning to purchase a zero depreciation cover after 5 years of your car, you must be aware of the factors affecting its premium so that you can make an informed decision. These factors are:
At present, two motor insurance companies in India offer zero depreciation cover for 7-year-old cars. Royal Sundaram General Insurance Company and Edelweiss General Insurance Company provide zero dep cover for 7-year-old cars with car insurance.
Royal Sundaram car insurance offers zero depreciation cover for cars that are not older than 10 years. On the other hand, the Zuno car insurance policy offers zero depreciation add-ons for cars less than 7 years old.
Most of the other insurance companies do not offer zero dep insurance after 5 years. Moreover, cars older than 7 years old are excluded from the zero depreciation cover by most insurance companies. To know if zero depreciation cover for 7-year-old cars is offered by your insurance company, you can check the insurer’s policy wording before purchasing the add-on.
Being an add-on cover, it's completely up to you to purchase a zero depreciation cover or not. But here are some reasons why you should buy zero dep cover for 7 years:
Depreciation is unavoidable as there will always be gradual wear and tear due to your car's regular driving and ageing. However, you can cover the depreciation borne by your car by purchasing a zero dep cover for 7 years. Remember to compare car insurance policy to buy the best plan with zero depreciation cover for a 7-year-old car.
22 Feb 2024In layman's terms, the IDV full form is the Insured Declared Value
31 Jan 2024Investing in a full-coverage car insurance policy is essential for
29 Jan 2024No Claim Bonus (NCB) is a reward given by an insurer to a
17 Jan 2024Buying their first car is no less than a milestone unlocked for
12 Dec 2023The type of four-wheeler you purchase also impacts its insurance