Find your suitable insurance plan
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6 min read
Updated on Nov 25, 2022
The zero depreciation car insurance cover is a very handy cover to have in motor insurance. It protects you from the IDV of the vehicle at the time of a claim. How does the zero dep cover help and how can you attach the zero depreciation rider to your plan. Read on to get all the answers.
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What exactly is zero depreciation meaning? To put it in simple terms, zero dep insurance protects your vehicle from the financial losses incurred due to ageing. With age, the value of the car falls. As a result, the IDV (current market value) also begins to depreciate. When you make a car insurance claim, the IDV is calculated and the claim amount is paid out accordingly. This leads to you receiving a lower claim amount. To work around this problem you need to invest in a zero depreciation cover.
Now that you know what is zero depreciation car insurance, you should try to get this cover. You can also use the zero depreciation car insurance calculator for better understanding. But before doing so, keep the following points in mind:
The zero dep cover is commonly available as a rider with comprehensive motor insurance plans. Most people who opt for this cover buy the rider. Explore the options that are available, compare the policies and find your ideal with which you can keep your vehicle protected in the best way.
There is one very important clause associated with zero dep insurance that you should know. The zero depreciation cover cannot be applied to a vehicle that is older than five years. You can only opt for this cover if your car is aged five or fewer years. Also, the car is best suited for new and expensive cars that may need repairs to its expensive parts.
Some companies do provide Zero Dep cover for older cars, i.e. more than 5 years as well, but the options are limited and expensive. So, choose wisely.
Zero depreciation is not a compulsory car insurance cover. It is an add-on or extra cover that you can opt to buy. You won’t be legally held responsible if you are found driving your car without this cover.
Once you are aware of these factors, you will be able to understand what is zero dep car insurance is. Then, compare car insurance plans, find the most suitable cover, attach the zero depreciation cover and make the plan custom-made as per your requirements.
| Age of the car | % of depreciation |
| Cars less than 6 months | NIL |
| Cars more than 6 months old but < 1 year | 5% |
| Cars more than 1-year-old but < 2 years | 10% |
| Cars more than 2 years old but < 3 years | 15% |
| Cars more than 3 years old but < 4 years | 25% |
| Cars more than 4 years old but < 5 years | 35% |
| Cars more than 5 years old but < 10 years | 45% |
| Cars more than 10 years | 50% |
| Car Components | % of depreciation |
| Tyre, rubber parts, battery, nylon, tubes and plastic parts | 50% |
| Glass and fibre materials | 30% |
| All other parts made of glass | NIL |
So, wondering who should opt for Zero Dep Car insurance, here is the list:
In order to calculate your zero dep car insurance premium, you can visit the PayBima Motor Insurance portal and use the zero dep car insurance premium calculator. Follow the steps to calculate the premium:
Let us take a look at this table to help understand the differences between Zero Depreciation Cover and Comprehensive Cover:
| Details | Basic Comprehensive Policy | Zero Depreciation |
| Nature | It is a standalone car insurance policy | This is an add-on cover that is attached to the base policy |
| Premium | Premium is more than third-party insurance but less as compared to Zero Dep | The premium increases by about 15% to 20% |
| Repair Cost | You need to make part payment when you make a claim | A much bigger share is paid by your insurer |
| Claim settlement | Made after deducting the depreciation value | Car depreciation rates are not applicable |
| Number of Claims | You can make any number of claims, however, you will lose out on your NCB | Under the Zero-Dep cover, you can make up to 2 claims in a policy year |
| Vehicle’s Age | Can be purchased for all vehicles | Comes with the restriction of 5 years |
| Details | Third-Party Car Insurance Policy | Zero Depreciation |
| Nature | It is a mandatory car insurance coverage | Zero Dep is an optional add-on cover that can be attached to the base policy |
| Premium | The premium charges are nominal and less than comprehensive policy | The premium increases by about 15% to 20% of the regular policy |
| Coverage | Only third-party liabilities are covered | Depreciation charges are not payable by the vehicle owner |
| Number of Claims | Any number of claims may be made | You can make up to 2 claims in a policy year |
| Vehicle’s Age | Has to be purchased for all vehicles | Mostly comes with the restriction of 5 years |
| Age of the Vehicle | Rate of Vehicle Depreciation without the Zer Dep Cover | Rate of Vehicle Depreciation with the Zer Dep Cover |
| Within 6 months | 5% | Nil |
| 6 months – 1 year | 15% | Nil |
| 1 year – 2 years | 20% | Nil |
| 2 years – 3 years | 30% | Nil |
| 3 years – 4 years | 40% | Nil |
| 4 years – 5 years | 50% | Nil |
It is very easy to find a good motor insurance plan these days. The plans are very comprehensive in nature, but there are certain drawbacks such as the calculation of the IDV by using the zero dep car insurance premium calculator. However, such problems can easily be tackled with the help of handy car insurance riders such as the zero depreciation rider. Add this to your comprehensive plan, or buy zero dep car insurance plan and keep your vehicle protected in the most wholesome way possible.
Also read: Difference Between Own Damage and Third Party Car Insurance Policy
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Your standard car insurance policy will only cover the damages to your vehicle in case of an accident, however, the repair or replacement which is caused due to depreciation will not be covered and will be paid out of your pocket. But with zero dep you, the insurer pays the entire amount of the car insurance claim without considering the effect of depreciation.
When you visit PayBima.com, you are given a lot of options to choose from. You can browse through different plans offered by different car insurer companies and select the one that offers the best coverage at the most well-suited price.
Following factors affect the zero dep:
Age of the car
MMV- make, model and variant
Registration City
The Car Insurance company
On average, a Zero Depreciation car insurance policy would cost you about 15% to 20% more than a basic comprehensive car insurance policy.
Own damage is a standalone policy that can be purchased if you already have a third-party liability insurance policy. It covers the damage your vehicle may suffer in an accident. Zero Depreciation, on the other hand, is an add-on that can be added over and above the OD cover or comprehensive insurance.
If you have a car or have recently purchased one which is less than 5 years old, it is recommended that you go for the zero dep add-on, as in the long run, you will save on the vehicle depreciation cost. In case your vehicle is more than 5 years old, a comprehensive insurance plan should be good enough. Weigh the pros and cons of each and then decide.
PayBima Team
PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.
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