Zero Depreciation Car Insurance: Eligibility, Renew Process & Benefits


7 min read

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.

What is zero depreciation (ZD) in car insurance?

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. 

Car Insurance from PayBima

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 Car Insurance Eligibility

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. 

What is zero dep or nil dep in motor insurance?

How to get zero depreciation (ZD) car insurance online?

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:

  1. Enter the registration number of your vehicle, your mobile number and your email id
  2. Fill in details about the previous policy/ claims made etc, then click “Get Quote”
  3. You can browse through the plans and compare the different car insurance plans available 
  4. Check the policy details and pay the premium 

How to renew zero depreciation (ZD) car insurance?

PayBima has made policy renewal extremely easy and quick. Follow the steps given below to renew your policy in no time

  1. You just need to visit the portal and fill in the required fields. 
  2. Then go to “Get Quotes”
  3. Browse through the available options, including add-ons, and select the one you prefer
  4. Pay the premium and you will soon receive the policy in your email

Car Insurance Renewal from PayBima

How to Claim Zero Dep (ZD) Insurance?

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:

1. Cashless Claims

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.

2. Reimbursement Claims

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.

What is covered in zero depreciation car insurance?

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.

Also Read: Zero Depreciation Car Insurance: Coverage, Calculator & Claim

What does the Zero Depreciation (ZD) Policy Not Cover?

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

  1. If the driver does not have a valid Driver’s License, the claim will not be accepted
  2. If the driver was intoxicated the claim will not be accepted
  3. Clutch oil, engine oil, coolant, etc. are not included in Zero-Dep
  4. Zero-Dep will also not cover compulsory deductibles if any
  5. Damage caused during participation in illegal activity is not covered.

Zero depreciation (ZD) car insurance benefits

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:

1. It prevents the financial outgo from your pocket for claims for damages of the car’s parts due to depreciation

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.

2. Here is how depreciation is calculated for your car’s parts in case of a claim

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.

3. A zero depreciation cover ensures the maximum claim settlement

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.

Why zero depreciation cover is essential for new or luxury cars:

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 zero depreciation policy is available only for private cars aged up to 5 years. For commercial vehicles, two-wheelers and cars older than 5 years the zero depreciation cover is not available.
  • Even in a zero depreciation policy, there is a limit to the number of claims which can be settled in the years in which the cover is available. Usually, insurers allow up to 2 zero depreciation claims throughout the policy period with zero depreciation cover.
  • A zero depreciation cover would entail a higher premium amount.

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.

Choose wisely!

FAQs on Zero Depreciation Car Insurance

How many times can you claim Zero Dep?

Most car insurance companies allow 2 claims in a policy year when you have a bumper to bumper car insurance.

Is TYRE covered under zero depreciation 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.

Which company gives zero DEP insurance after 5 years?

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.

Can I get zero depreciation car insurance after 5 years India?

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.

Can I get zero depreciation car insurance after 7 years?

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.

Is Zero Depreciation Cover available for commercial vehicles?

Yes, commercial vehicles can also be covered under the protection of bumper to bumper insurance, but only till the age of 5 years.

What is not covered by the Zero Depreciation Cover?

Your zero-depreciation policy does not cover - clutch oil, engine oil, coolant etc. and the compulsory deductibles.

How to check zero dep insurance in policy is available or not?

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.

Does zero dep cover plastic parts?

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.

Are consumables covered in zero dep insurance?

Consumables such as nuts and bolts, engine oil, coolant, grease, bearing etc. are not a part of the zero dep insurance.


How depreciation is calculated for the purpose of claims

Checklist You Should Follow before Purchasing a Car Insurance Policy

What is Better – Buying Car Insurance Online or through an Agent?

What is Zero Depreciation for Two Wheeler Insurance?

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Mar 17, 2021
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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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