Zero Depreciation Car Insurance

What is Zero Depreciation in Car Insurance?

Zero depreciation is an optional add-on available with a comprehensive car insurance policy. Under this coverage, the insurance company does not deduct the depreciation amount of the car parts when settling an accidental claim. In standard car insurance claims, insurers subtract the loss in value of the car parts due to wear and tear over time.

However, with the zero depreciation car insurance, the insurer pays the full cost of the repair or replacement of the damaged car parts, which reduces your out-of-pocket expenses at the time of claim. Typically, the zero dep cover is available for cars up to 5 to 10 years old. The number of claims you can raise under this add-on varies from one insurer to another.

Who Should Opt for Zero Depreciation Car Insurance?

Here are some reasons to get a zero depreciation add-on with your own damage or comprehensive car 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.

What are the Benefits of Zero Depreciation Car Insurance?

Listed below are the advantages of buying bumper-to-bumper protection with your car 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.

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:

What Does Zero Depreciation Car Insurance Cover?

The zero depreciation car insurance covers the entire cost of repair and replacement of the damaged car parts under the following situations:

• 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.

Differences Between Comprehensive and Zero Depreciation Car Insurance

While comprehensive car insurance is a standard policy, zero depreciation is an optional add-on that you can purchase with your comprehensive plan to receive 100% compensation for repairs. Here is a table stating the basic differences between zero depreciation add-on and a 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: #1 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.

How to Buy 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.

Claim Settlement with Zero-Depreciation Car Insurance

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 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. However, you should note that while filing a zero depreciation claim, you will lose your No Claim Bonus (NCB), unless you have the NCB protector add-on cover.