Zero Depreciation Car Insurance

Zero depreciation cover is also known as bumper-to-bumper or nil depreciation cover. With zero depreciation car insurance, the policyholder does not have to pay the depreciation value of the damaged or replaced parts of the car and can claim the full amount.

What is Zero Depreciation in Car Insurance?

A zero depreciation cover is an add-on to a comprehensive car insurance policy under which the insurance company does not factor the depreciation sustained by the insured car over the years. Under a nil depreciation add-on in car insurance, a policyholder can claim the total cost of repair or replacement of car parts, including their depreciated value in case of accidental damage.

In simple words, zero depreciation car insurance means that the depreciation value of the damaged parts won't be deducted from the claim amount, and you will receive full compensation. Thus, helping you save a huge amount. Moreover, the zero dep insurance applies to vehicles that are up to 10 years old. The number of claims a policyholder can raise under a zero depreciation car insurance varies from insurer to insurer.

Benefits of Zero Depreciation Add-on in Car Insurance

Listed below are the advantages of buying bumper-to-bumper protection with your motor insurance policy:

• Minimal Out-of-Pocket Expenses: A zero-dep add on helps reduce your out-of-pocket expenses to almost zero since it does not factor in the depreciation of your vehicle or its parts during claims.
• Nominal Additional Fee: You can opt for a nil dep add on by paying a slightly higher premium for your car insurance policy.
• Peace of Mind: When you purchase car insurance online with the zero depreciation cover, it enhances the overall coverage of your vehicle, ensuring stress-free driving and long-term savings.

What is Covered Under Zero Depreciation Car Insurance?

These are the situations under which the zero depreciation add-on will cover the repairs and replacement:

• Accidental Damages: The zero depreciation add on offers coverage for damages to your car from a road accident or collision.
• Natural or Man-Made Disasters: If your car gets damaged due to an earthquake, flood, landslide, or in a terrorist attack, riots, or vandalism, the zero dep add-on will help you.
• Any In-transit Damages: The zero depreciation car insurance also covers damages to your car when in transit from one location to another.

What is Not Covered Under a Zero Depreciation Add-on Cover?

While a zero depreciation add-on in car insurance offers comprehensive coverage for your vehicle, there are some exclusions that you should know:

• Total Loss or Theft: In case of a total loss or theft of your insured vehicle, your insurer will settle the claim based on your vehicle's IDV(Insured Declared Value), which would involve depreciation.
• Regular Wear and Tear: Any damage caused to your insured car by its usual wear and tear or electrical/mechanical failure is not covered under a zero dep add on.
• Negligent Driving: Claims under your zero depreciation car insurance will be rejected if the driver is found to be driving without a valid licence or under the influence of alcohol or toxic substances.
• Vehicle Used for Purposes Other Than Intended: Damages sustained by your private vehicle when used for commercial purposes are also not covered under zero depreciation car insurance.

Should You Opt for Zero Depreciation Car Insurance?

Here are some reasons to get a zero depreciation add-on with your four-wheeler insurance policy:

• New Car Owners: If you have bought a new car, it is recommended that you add a zero dep cover while buying a vehicle insurance policy for enhanced protection.
• Owners of Luxury Cars: Luxury cars have expensive parts that can incur significant costs for their repair or replacement during claims. Hence, opting for zero depreciation car insurance is advised to avoid these expenses and ensure savings.
• New Drivers: If you are a new driver, there are high chances of accidents due to lack of experience. Hence, you should buy a zero depreciation car insurance policy to save your out-of-pocket expenses.
• Those Living in High-risk Areas: You should consider buying a zero dep cover with your car insurance policy if you reside in an accident-prone area since there are higher risks of your vehicle getting damaged.

Zero Depreciation Car Insurance Vs Comprehensive Coverage

Below is a table stating the basic differences between zero depreciation add-on and a basic comprehensive car insurance policy:

How is Zero Depreciation Car Insurance Premium Calculated?

These are the key factors taken into consideration while calculating premium for a zero dep car insurance policy:

• Age of the Vehicle: Your car's age is an important factor that impacts policy pricing. The older your vehicle, the higher its depreciation; consequently, your zero dep car insurance premium is also higher.
• Make, Model, Type: The make and model of a vehicle also affect the car insurance premium. A car with a larger cubic capacity and expensive parts will incur higher insurance costs.
• Location of Vehicle Registration: The cost of the zero depreciation car insurance premium is higher in metropolitan cities compared to other tier-2 cities.
• Accessories: If you have installed any separate accessories in your vehicle, you will have to pay additional charges for your zero dep car insurance policy.

Insurer-Wise Number of Zero Depreciation Claims

Cited below are the number of times policyholders can raise zero dep (ZD) and non zero-dep claims against their four-wheeler insurance policy based on different insurers:

Disclaimer: The insurers/plans mentioned are arranged in order of highest to lowest gross direct premium income for motor insurance(total) by non-life insurers within India segment wise as per “Gross Direct Premium Income Underwritten By Non-Life Insurers Within India (Segment Wise): for the period upto March 2025 (Provisional & Unaudited ) In FY 2024-25”, published by General Insurance Council. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. The insurers/plans mentioned are offered by Policybazaar's insurer partners offering motor insurance plans on our platform for complete list of insurers in India refer to the IRDAI website www.irdai.gov.in.

Car Depreciation Rates Approved by IRDAI

The vehicle deprecation rates in India are as per guidelines set by the Insurance Regulatory and Development Authority of India (IRDAI) every year. Here are tables showcasing the depreciation rates of cars and different car components:

How to Get Zero Depreciation Car Insurance Online?

To buy or renew zero depreciation insurance online, just follow this simple process:

• Visit Policybazaar.com and select 'Car Insurance' on the homepage.
• Enter your car number on the given form and select its make/model, variant, RTO, etc.
• Now, from the given four-wheeler insurance quotes, select a plan that suits your insurance needs and budget.
• Select 'Zero Depreciation' from the 'Addons' section.
• Now you will see the updated policy premium, which you can pay via available payment modes.
• After successful payment, your zero dep car insurance policy documents will be mailed to you.

Tips to Renew Zero Dep Car Insurance Online

Car insurance renewal with a zero depreciation cover is a simple and hassle-free process, especially when it is done online. Here are some tips to renew zero dep car insurance online:

• Keep a track of the renewal date: The insurer or the policy aggregator usually sends a reminder over a call or email. It is recommended that you keep a record of zero dep car insurance renewal date so that the policy can be renewed before the due date. Also, do not forget to check your no claim bonus while renewing your zero dep policy to avail of a reduced premium amount.
• Enter the required policy details: While renewing zero depreciation car insurance online, there is no need of running from pillar to post for any paperwork, cheque submission, etc. It can be done online on Policybazaar.com by clicking on 'Renewal.' One just needs to choose the existing or new customer option, to begin the process.
• Follow the instructions: Submit all the required details, fill out the form and click on the payment option.
• Make the payment online: You can make the payment online using cards, net banking, or UPI.
• Renewal: The insurer will send an acknowledgement of the zero depreciation car insurance renewal on your registered email id and phone number.

Claim Settlement with Zero-Depreciation Car Insurance

At the time of claim settlement, the depreciation applicable to your car parts is mentioned in the policy wording. As mentioned above, if you don't have a zero dep add-on, you need to pay 50% depreciation on nylon, plastic, and rubber parts, including batteries, 30% on fibreglass components, and 5-10% on wooden parts.

However, if you already have zero depreciation car insurance, you are not required to pay anything to the insurer. As a result, you will receive the full claim amount without deducting the depreciation sustained by your car.

In the case of standard car insurance plans, the insurer only reimburses the loss after deducting the depreciation value of the replaced parts, unlike a nil depreciation car insurance policy.