A zero depreciation cover is an add-on cover that can be purchased to cover the depreciation borne by the insured car. By purchasing this add-on at an additional premium, you don't have to pay for the amount of depreciation from your pocket. 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 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 on the value of the car parts to be replaced or repaired at the time of claim settlement. In other words, zero dep cover after 5 years covers the rate of depreciation on a car of more than 5 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 percentage of depreciation for cars between the age of 5 to 10 years old, will be 40%. Thus, if you are purchasing zero dep cover for a 7-year-old car, the percentage of depreciation applicable when you make a claim will be 40%.
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 offers zero depreciation cover for 7-year-old. Royal Sundaram General Insurance Company and Edelweiss General Insurance Company offers zero dep cover for 7-year-old cars under their car insurance plans.
Royal Sundaram car insurance offers zero depreciation cover for cars that are not older than 10 years. On the other hand, the Edelweiss car insurance policy offers zero depreciation cover for cars less than 7 years old.
Most of the other insurance companies offer zero dep cover for cars up to 5 years of age. 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 your policy terms and conditions.
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 of your car regular driving and ageing. However, you can cover the depreciation borne by your car by purchasing a zero dep cover for 7 years. Do remember to compare car insurance policy to buy the best plan with zero depreciation cover for a 7-year-old car.
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