Zero Depreciation Add-On Cover for Commercial Vehicle Insurance

What is Zero Depreciation Add-On Cover in Commercial Vehicle Insurance?

The zero-depreciation cover, also called "nil depreciation" or "bumper-to-bumper" cover, is an optional add-on that policyholders can buy with their commercial vehicle insurance at an additional premium.

Usually, when you file a claim for the replacement or repair of any part, such as a bumper, headlight, etc., the insurer deducts the depreciation costs based on the age of the commercial vehicle. However, with this add-on, the commercial vehicle insurance company pays the full cost of the replaced parts without deducting any depreciation costs. It is useful for new commercial vehicles or those operating in high-risk areas and requiring frequent repairs.

What is the Difference Between Comprehensive and Zero Depreciation in Commercial Vehicle Insurance?

Both zero-depreciation commercial insurance add-on cover and a comprehensive commercial vehicle insurance have some key differences that are mentioned in the table below:

Do You Need Zero Depreciation Add-On Cover?

Yes, the zero-depreciation add-on is a smart choice, especially for new commercial vehicles. It is ideal for vehicles that operate in high-traffic areas or areas where the chances of damages and frequent part replacements are higher.

Business owners who run fleets, logistics operations, or high-value vehicles often prefer this add-on to reduce unpredictable repair expenses. This add-on helps to avoid depreciation deductions and ensure higher claim payouts during an accident. This cover offers peace of mind and long-term value.

What are the Advantages of Zero Depreciation Add-On Cover?

The following are some of the advantages that come with a zero-depreciation add-on cover in commercial vehicle insurance:

• Ensures full reimbursement for replaced vehicle parts during a claim, with no depreciation deductions
• Helps lower out-of-pocket expenses for repairs after accidents
• Covers components that typically depreciate fast, like plastic, rubber, and fibre parts
• Ideal for newer vehicles, fleet operators, or high-value commercial vehicles
• Makes claim settlements smoother and more cost-effective

Impact of Depreciation on Commercial Vehicle

Depreciation refers to the reduction in the value of an asset with time because of factors like wear and tear, age, and obsolescence. Commercial vehicles depreciate with time every year. In case of an accident, if your commercial vehicle is damaged, you may be unable to cover all the expenses incurred for the replaced or repaired parts. This is because commercial vehicle insurance companies pay for the replaced parts of the vehicle after deducting the amount of depreciation.

Therefore, opting for a zero-depreciation cover for your commercial vehicle is always beneficial. The zero-depreciation cover can help you get the most from your commercial vehicle insurance policy.

What to Consider Before Opting for a Zero Depreciation Add-On with Commercial Vehicle Insurance?

Here are some of the factors to consider before purchasing a zero-depreciation add-on cover with your commercial vehicle insurance:

• Age of Your Vehicle: The age of your vehicle is the most important factor when purchasing a zero-depreciation cover, since vehicles incur depreciation as per their age.
• Premium: The premium for a zero-depreciation add-on is higher than the standard comprehensive and third-party commercial vehicle insurance.
• Claim Limitation: Several insurers put a limit on the number of claims that can be filed against a zero-depreciation commercial vehicle insurance policy. All the claims that will be filed after the designated limit will be settled as per the comprehensive commercial vehicle insurance terms.