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.
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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.
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.
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% |
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 |
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-
You May Also Read: All About Zero Dep Insurance
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!
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09 Jan 2023
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*Savings are based on the comparison between the highest and the lowest premium for own damage cover (excluding add-on covers) provided by different insurance companies for the same vehicle with the same IDV and same NCB.
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