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It is quite normal for a car to suffer wear and tear with time, which leads to depreciation of the vehicle. A standard car insurance policy will not cover your car against depreciation; you can, however, cover it through a zero-depreciation car add-on coverage. In this post, we will discuss the zero depreciation cover of a car as old as 7 years.
Like many other car insurance add-ons, zero depreciation insurance means an add-on coverage that can be purchased with a car insurance policy. This add-on is mainly used to get coverage on the depreciation that your car goes through. You can buy this add-on by paying an extra charge or premium to avoid depreciation charges from your pocket. Motor insurance companies generally do not offer zero dep insurance after 5 years in India. However, some insurance companies allow zero depreciation coverage for up to 7 years.
A 7-year coverage against the depreciation of your car will ensure that you don’t have to pay any depreciation amount incurred by your vehicle for up to 7 years of buying your car. The depreciation expenses on the parts of your vehicle typically levied on the insured will be incurred by your vehicle insurer at the time of claim settlement if you have a zero-depreciation cover.
The IRDAI or the Insurance Regulatory and Development Authority of India has set certain rates to determine the depreciation rate of your four-wheeler. So, when you buy zero-depreciation coverage for your car, your car insurance company will use the rates fixed by IRDAI to determine the rate of depreciation of your vehicle.
For example, 40% is the rate of depreciation set for 5 to 10 years old cars. So, if you are buying a zero-dep cover for your 7-year-old vehicle, you will be able to avail 40% of the depreciation percentage while making a claim.
A zero-dep cover doesn’t offer coverage on your car’s entire body parts. There are some exclusions of a zero-depreciation cover as mentioned below:
The premium of a zero-depreciation cover of a car depends on the following factors:
The age of your car has a significant influence on the price of your zero-dep insurance premium. So, if your vehicle is 7 years old, the premium charged would be higher as compared to a car that is less than 7 years of age. Hence, the older your vehicle is, the higher the premium is.
The premium of zero-dep insurance also depends on the model of your vehicle. Some specific models of cars may not be covered under the plan. So, it is better to get clarity from the insurance company before planning to buy the zero-dep add-on.
The cost of a zero-dep premium also depends on your location. So, the city/town you are based in is also a deciding factor for the rate of premium you pay for your zero-dep car insurance add-on.
In India, two motor insurance companies offer the add-on of zero depreciation insurance for cars that are over 7 years old. These insurance companies namely; Royal Sundaram General Insurance Company and IFFCO Tokio Insurance Company provide coverage for cars as old as 7 years.
Royal Sundaram Car Insurance, a part of the Royal Sundaram General Insurance Company, provides zero depreciation add-ons for cars that are not more than 10 years old. IFFCO Tokio Insurance Company also offers the zero-dep add-on for cars up to the age of 10 years.
On the other hand, other insurers in India offer zero-dep insurance coverage for cars up to 5 years. Most insurers exclude cars that are over 7 years old from the zero-dep cover. To see if an insurer offers zero-dep coverage for 7+ years cars, you have to check the car insurance policy document to understand the terms and conditions.
Since the zero-dep cover is an add-on coverage, it depends on the insured if they want to avail of this rider or not. Here are some reasons to choose a zero-dep insurance cover for 7 years:
Depreciation in machines like your car is something you can’t avoid. After all, your car is sure to go through regular wear and tear over the years. However, if you buy zero-depreciation car insurance for 7 years, you can avoid the depreciation borne by your car during claims. Simply remember to compare different zero-depreciation car insurance policies to buy the best 7-year-old zero-dep plan for your four-wheeler.
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When you purchase car insurance with the add-on of zero depreciation, you receive coverage for damages to your car caused by accidents without any value reduction. So, with bumper-to-bumper insurance after 5 years you don’t have to pay for the depreciation cost from your pocket.
The percentage of depreciation for cars between 5- 10 years is 40%.
Mostly, the add-on of zero depreciation is available after 5 years. However, some insurers offer the add-on till the age of seven years of your car as mentioned in the post above.
If you do not buy zero-dep car insurance, the depreciation reimbursement of your car will be deducted from your claim amount by the insurer at the time of raising a claim.
Some of the top car insurance companies in India are:
~ HDFC Ergo
~ Tata AIG
~ IFFCO Tokio
~ Bajaj Allianz
~ Reliance General
~ Royal Sundaram
~ Edelweiss, etc.
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