7 min read
Updated on Aug 08, 2023
A car insurance policy is a mandatory cover for your car as per the regulations of the Motor Vehicles Act, 1988 to pay for liability claims to third parties. Furthermore, as cars are purchased on loan the financier requires the asset to be protected for loss or damage to the car As such if you own a car, you should have a valid car insurance policy on it. With a comprehensive car insurance policy comes various add-on covers. A zero depreciation, also known as bumper to bumper insurance or nil-dep car insurance cover is one such add-on rider that comes with a car insurance plan. This add-on cover has a lot of benefits and that is why it is recommended to be added to your car insurance plan. Before we understand the importance of a zero depreciation cover, let us understand what it means.
When you make use of an object or a machine, with time, it loses its value. This loss due to wear and tear is called depreciation. While your car insurance policy will cover the damages to the vehicle in case of an accident, the repair or replacement caused due to depreciation will not be covered and will be paid out of your pocket. This is where zero depreciation car insurance comes into play.
To get an idea of how much loss of value your vehicle has to suffer because of depreciation, take a look at the table below.
|Age of the Vehicle||Rate of Vehicle Depreciation|
|Within 6 months||5%|
|6 months – 1 year||15%|
|1 year – 2 years||20%|
|2 years – 3 years||30%|
|3 years – 4 years||40%|
|4 years – 5 years||50%|
Zero Depreciation cover is usually available for cars that are less than 5 years old. Though there are certain car insurers that offer nil dep insurance for cars more than 5 years old too, they are generally much more expensive. Spending so much on an old car may require a second thought.
In order to get your zero dep car insurance online, along with your standalone or comprehensive car insurance cover, you can visit the PayBima Motor Insurance portal. Follow the steps given below:
PayBima has made policy renewal extremely easy and quick. Follow the steps given below to renew your policy in no time
Your Zero Depreciation car insurance will be settled along with your regular claim. After an accident, you need to inform the insurance company as soon as possible. Post the repair, the insurance company will pay for all the covered expenses, you would have to pay only for the compulsory deductible. Claims can be of two types:
When you need to make a claim, you have to take your vehicle to a network garage. Here, once the surveyor examines your vehicle, you need to fill in the claim form and submit a few documents. Thereafter, the company would settle the bill including the zero dep add-on claim.
In case you could not get your car repaired at a network garage, you would have to get the car inspected for estimation of repair cost. Once that is approved, you can go ahead witht eh repairwork. However, you would be required to pay the repair bill upfront. Then you can file for reimbursement claim with the insurer along with the original bills and reciepts. You will also receive your depreciation reimbursement.
As explained above, when your car suffers damages for which you raise a car insurance claim, the insurer does not pay the actual amount of the parts damaged and repaired. Depreciation of the parts is considered in the calculation of the claim amount payable. Thus, insurers pay a reduced amount of claim after deducting the depreciation of the parts replaced. However, if a zero depreciation cover is added to the policy, no reduction for depreciation takes place. The insurer pays the entire amount of the car insurance claim without considering the effect of depreciation.
Though the scope of your insurance policy greatly improves with bumper-to-bumper car insurance, there are certain exclusions that you need to watch out for
When you add the zero depreciation cover to your car insurance policy, you have to pay an additional premium. Despite this additional premium outgo, a zero depreciation cover is important because of the financial saving it entails. Let’s see how:
Do you know how depreciation on the parts of your carstrains your pocket? Your motor car policy is an indemnity policy and depreciation in the value from usage is disallowed; the policy has a table on the basis of which depreciation is calculated.
|For plastic and rubber parts of your car||50% is the rate of depreciation|
|For fiber parts||30% is the rate of depreciation|
|For other metallic parts||0% for the first 6 months. Thereafter, the rate of depreciation depends on the age of your car. It starts at 5% for the first year, 10% for the second year and so on.|
When you make claim for the replacement or repairs of the damaged parts of your car, the insurance company settles the claim after considering the above-mentioned rates of depreciation. Thus, if you make a claim of Rs.10, 000 for repairing the fiber-glass parts of your car, you would get a settlement of Rs.7000 only. The rest of Rs.3000 would be deducted for depreciation and you would have to pay the amount from your pockets. However, if you have a zero depreciation cover, you get a settlement of the entire Rs.10, 000. The depreciation of Rs.3000 is not considered in a zero dep car insurance policy. Thus, a zero depreciation cover ensures maximum claim settlement.
In the case of a brand new car or a luxury car, a zero depreciation cover is essential because of the high cost of repairs incurred when such a car faces damage. Imagine the financial burden you would entail if you are the owner of a new or a luxury car! Moreover, if you are a new driver or you live in an accident-prone area with a high probability of accidents, it is better to include a zero depreciation cover.
So, due to these benefits, a zero depreciation cover is important for your car. However, there are certain points which you should keep in mind when you decide to opt for the zero depreciation cover. Here are the points :
A car insurance policy is an indemnity policy which seeks to compensate you only for the actual loss suffered. This actual loss is calculated after taking into consideration the depreciation of the parts damaged. Depreciation puts a big dent in your claim settlement and a zero depreciation car insurance policy is important to protect against such a dent. So, if you are buying a new car or have a car aged less than 3-5 years, buy a zero depreciation cover to ensure a higher financial burden on you is limited.
Most car insurance companies allow 2 claims in a policy year when you have a bumper to bumper car insurance.
Yes, like other parts the tyres are also covered when you have a nil-dep policy. However, some car insurers offer this cover only at 50%. It is advised that you check the company website for the same.
IFFCO Tokio Insurance and TATA AIG Insurance offer zero-dep for vehicles more than 5 years old. However, you may have to pay almost 25% to 30% more as the premium. It is recommended that you visit the company websites for more details.
Some companies like IFFCO Tokio Insurance and TATA AIG Insurance offer car insurance after 5 years as well, however, you may have to pay a much higher premium.
Though a few companies offer zero depreciation car insurance after 7 years, they may charge a premium of almost 25% to 30% more. Speeding so much on an old car is not always advisable. Therefore, weigh the pros and cons and then decide.
Yes, commercial vehicles can also be covered under the protection of bumper to bumper insurance, but only till the age of 5 years.
Your zero-depreciation policy does not cover - clutch oil, engine oil, coolant etc. and the compulsory deductibles.
A zero depreciation cover is an add-on that has to be purchased by paying an extra premium. If you already have car insurance, you can check your policy papers to confirm the same.
Yes, plastic parts are also covered in a zero dep car insurance policy, however, only up to 50% by some car insurance companies. It is recommended that you visit the specific company websites for more details.
Consumables such as nuts and bolts, engine oil, coolant, grease, bearing etc. are not a part of the zero dep insurance.
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