Zero Depreciation in Car Insurance: Is It a Good Deal?

So you bought a new car. Congratulations! You have probably put a lot of time and effort into buying your new car. However, buying a car insurance policy is also a significant step toward financially protecting your precious possessions. But does your car insurance cover the entire cost of the repairs for the damages to the car parts? Let's find out.

Read more

Get Car Insurance starting at only ₹2094/year*
Renew in 2 minutes
Chose from 20+ insurers
51 lakh+ Cars insured
Processing
Other options

Understanding Depreciation in Car Insurance

Depreciation refers to the loss of value of a vehicle over time due to age, wear and tear and obsolesces. If you purchase a new car for Rs 10 lakh, its value will decrease with every passing year.

In case of an accident, the insurer will calculate the claim based on the depreciated value of the car parts. They will also have certain deductions and exemptions; in fine print that apply to the policy. Unfortunately, the insurer analysis the damage sustained by the insured car, and the value is excluded from the final claim amount that you will receive. To overcome this problem, the zero-dep on four-wheeler insurance comes to help you.

What is Zero Depreciation Cover?

A zero dep cover is an add-on cover (rider) that covers the depreciation applicable to the value of the insured vehicle. With it, the insurer does not subtract the depreciation value on different car parts while covering any claim amount. This cover is commonly known as the Bumper to Bumper cover and the Nil Depreciation cover.

To get wide coverage, you should buy a zero-dep car insurance policy. Even you can opt for this cover during the car insurance renewal.

Calculation of the Rate of Depreciation

The Insurance Regulatory and Development Authority of India (IRDAI) has laid down some depreciation rates for insurance claim purposes. This applies to all car insurance companies across the country. The depreciation rates are as follows-

Car Parts Rate of Depreciation
Plastic parts, nylon parts, rubber parts, tyres & tubes 50%
Paintwork 50%
Glass and fibreglass components 30%
Metallic parts 0-5%

How is Zero Dep Cover Different from Comprehensive Car Insurance?

In the case of a comprehensive insurance policy, the policyholder is reimbursed by the amount after a complex calculation taking into account the car depreciated value.

On the other hand, with the Zero-Dep in car insurance, the policyholder will be reimbursed with the full amount of the repair cost regardless of the age and the car's current value.

To give you a better insight, the below table highlights the difference between a comprehensive policy with zero dep cover and without it-

Features Comprehensive Car Insurance With Zero-dep Add-on Cover Comprehensive Car Insurance Without Zero-dep Add-on Cover
Claim Amount Get compensated without deducting the depreciation Depreciation will be applicable on the certain car parts
Premium Slightly higher Comparatively lower
Age of the car Up to 5 years Up to 15 years
Own Expenses Less burden on the policyholder while settling claims The policyholder has to pay some of the expenses
Coverage for Various Car Parts Maximum coverage Comparatively less

Ideal Time to Purchase a Zero Depreciation Cover

A zero-depreciation cover can help you save a lot of money for repairs and when replacing expensive car parts. This add-on cover is beneficial for the following cases-

  • Luxury cars and high-maintenance car owners must get this cover as the depreciation value of these parts would be even higher.
  • Those who reside in an accident-prone area where the car owner might bear high service costs should opt for this cover.
  • Those who worry about small dents & bumps and wish to keep their car in pristine condition should buy this cover.
  • New drivers, aged drivers, and young drivers who are unsure of their driving skills may end up needing repairs more than usual. Therefore, they must choose this car insurance add-on cover.
  • This type is ideal for a brand-new car as it will fully cover all damages to the car.

You May Also Read: All About Zero Dep Insurance

Final Thoughts

Before buying zero dep add-on cover for your car, it is advised to take time and compare multiple plans offered by different insurers to make a knowledgeable decision. You can also visit the official website of Policybazaar Insurance Brokers Limited if you want a precise comparison. Looking at the advantages associated with this add-on cover, it will turn out to be a great investment for you!

Find similar car insurance quotes by body type

Hatchback Sedan SUV MUV
Search
Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.
 Why buy from policybazaar

Car insurance articles

Recent Articles
Popular Articles
Does Comprehensive Car Insurance Cover Hit and Runs?

09 Jan 2023

Yes, your comprehensive car insurance policy may cover the damages
Read more
The New IRDAI Regulations for KYC in Car Insurance

03 Jan 2023

As per the IRDAI guidelines, all motor insurance sectors including
Read more
How Can We Use Roadside Assistance Cover in Car Insurance?

09 Dec 2022

Roadside Assistance is an add-on cover offered with your
Read more
Is Nut Bolt Covered Under Car Insurance?

06 Dec 2022

No, any damage to the nut bolt or any other consumable of your
Read more
What Happens When You Only Have Third-Party Insurance?

05 Dec 2022

Third-party car insurance is a mandatory cover as per the motor
Read more
Getting Your Duplicate Car Insurance Policy is Easy-Here’s How!
Losing your car insurance documents can be daunting. In such a state of affairs, the first thing that comes to your
Read more
Check Car Insurance Status Online on Parivahan Sewa/ RTO?
It doesn’t matter if you are an excellent driver or take your car out only once in a few months, your car must be
Read more
Multiple Ways To Check Your Car Insurance Status Online
With everything going digital, checking vehicle insurance status online has become easier than ever. It not only
Read more
How to Find Car Insurance Details by Registration Number?
As a car owner, it is mandatory to have a car insurance policy under the Motor Vehicles Act, 1988. Sometimes, you
Read more
Transferring Car Insurance from One Person to Another
An integral part of selling a car, for both the buyer and the seller, is ensuring a successful car insurance
Read more

top
View Plans
Close
Download the Policybazaar app
to manage all your insurance needs.
INSTALL