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Zero Depreciation Car Insurance
Allow Added Protection
Allow Reimbursement Without Accounting for Depreciated Value
Limits Extra Expenses from your Pocket
Allow Greater Peace of Mind
Zero depreciation is an add-on cover that can be purchased with a car insurance policy. Under this cover your insurance provider would settle the claim amount of your car without considering the depreciation on different car parts. This way, your claim amount gets enhanced. The Zero Depreciation Car Insurance cover can be purchased for limited times during your policy term.
So, if you do not have a zero depreciation cover, your insurance company will consider depreciation on the parts of your vehicle, thereby they will pay you claim only after deducting the depreciation amount. However, if you have the add-on cover, there will not be any deduction of depreciation, thereby you will receive more money for your claims.
What is Zero Depreciation Car Insurance?
Zero Dep Car Insurance is an add-on cover which many car owners opt for with their comprehensive car insurance plan. This add-on is also called by other names like Bumper-to-Bumper add-on cover. Having this cover by your side, you don't have to bear the accountability of your car depreciation. Rather, you can transfer it to your insurance provider by paying a nominal amount of premium, which you can recover in your claims.
So, a Zero Depreciation car insurance is an add-on cover that you can buy with a comprehensive car insurance policy to make your car free from general depreciation which is considered at the time of making a claim of your car insurance.
Meaning of Depreciation?
Depreciation, in simple terms, means decrease in cost or reduction in the value of an asset over time, mainly caused by wear and tear or due to aging. In terms of car, depreciation works in relation to your car's age. The more the car's age, the higher its depreciation is. Of course, your car is also subject to devaluation. That is the value of your car reduces with time due to regular abrasion and you need to bear the onus of the liability caused to your car by depreciation. So, when you seek a claim from your insurer, this depreciation amount is deducted and the remaining is only compensated by the insurer. Here, having a Zero Depreciation cover helps.
Benefits of Zero Depreciation Car Insurance Cover
Below are some benefits of having a zero dep insurance cover:
Widens coverage
With an add-on cover of zero depreciation, not just new drivers but the experienced ones can also get an advantage. You can have added protection to combat financial crises arising out of your car damage due to any mishap.
Cost of repair is compensated without considering depreciation
With zero dep insurance cover, the expenses that arise due to repair of the insured parts of your car can be reimbursed without accounting for their depreciated value.
Limits extra expenses
This add-on cover helps to limit any extra costs that you might have to pay from your pocket due to depreciation cost of your car. However, with zero dep insurance, you can expect your insurer to settle the claim without considering the depreciation value.
Help save money
Though the premium rate becomes higher with a zero depreciation add-on cover, the higher compensation of the claim that you receive from your insurer compensates for it. As such, the compensation money in most cases remains higher as compared to the premium that you pay for the add-on cover.
Greater reimbursement
With zero depreciation add-on cover, you can receive a higher claim amount as it does not take into account the depreciation rate of the car.
Peace of Mind
With this added layer of protection, you can further strengthen the depreciation rate of the car and can have greater peace of mind.
Widens coverage
With an add-on cover of zero depreciation, not just new drivers but the experienced ones can also get an advantage. You can have added protection to combat financial crises arising out of your car damage due to any mishap.
Cost of repair is compensated without considering depreciation
With zero dep insurance cover, the expenses that arise due to repair of the insured parts of your car can be reimbursed without accounting for their depreciated value.
Limits extra expenses
This add-on cover helps to limit any extra costs that you might have to pay from your pocket due to depreciation cost of your car. However, with zero dep insurance, you can expect your insurer to settle the claim without considering the depreciation value.
Help save money
Though the premium rate becomes higher with a zero depreciation add-on cover, the higher compensation of the claim that you receive from your insurer compensates for it. As such, the compensation money in most cases remains higher as compared to the premium that you pay for the add-on cover.
Greater reimbursement
With zero depreciation add-on cover, you can receive a higher claim amount as it does not take into account the depreciation rate of the car.
Peace of Mind
With this added layer of protection, you can further strengthen the depreciation rate of the car and can have greater peace of mind.
How is Depreciation Calculated?
The IRDAI of India has set the below guidelines of depreciation rates and based on that the total depreciation of a vehicle is considered:
- It allows 50% depreciation on Plastic Parts, Batteries, Rubber, and Nylon parts.
- It allows 30% depreciation on Fiberglass Components.
- 5% depreciation on wooden Parts (for first year) and 10% (for second year).
Depreciation Percentage in Vehicles
| Vehicle Age | Depreciation Percentage |
|---|---|
| Below six months | 5% |
| Above six months but below one year | 15% |
| Above one year but below two years | 20% |
| Above two years but below three years | 30% |
| Above three years but below four years | 40% |
| Above four years but below five years | 50% |
Depreciation percentage in Vehicles for Metallic Parts
| Vehicle Age | Depreciation Percentage |
|---|---|
| Below six months | Nil |
| Above six months but below one year | 5% |
| Above one year but below two years | 10% |
| Above two years but below three years | 15% |
| Above three years but below four years | 25% |
| Above four years but below five years | 35% |
| Above five years but below ten years | 40% |
| Above ten years | 50% |
Frequently Asked Question
Yes, to reduce the financial burden caused by accidents and mishaps, you must have a cover of zero depreciation, especially for new drivers. If you live in an accident-prone area, you must go for this add-on cover to easily get compensation for the damages without hassle.
Zero depreciation is a car insurance add-on cover under which insurance companies allow settling of claims for your car repairs without considering the amount of depreciation levied on your car parts, which enhances your claim amount.
Yes, you can get zero depreciation car insurance as it is a very useful add-on cover, which ensures that the policyholder gets higher payouts while making claims and thus reduces your burden on own costs to be incurred.
Yes, zero dep insurance is a very useful add-on cover as it ensures that the policyholder get higher payouts while making claims, thereby reducing their burden of own costs that the policyholder might have to incur due to depreciation charges.
Most insurers don't offer zero depreciation cover for cars older than five years. Also, there are some insurers who offer zero depreciation cover for cars below three years. However, a few insurers have also started offering a 7-year zero dep cover.
Though most insurers don't offer zero depreciation cover for cars beyond five year old and there are some who offer this cover for cars up-to three years old. However, a few insurers have also started offering a 5-year zero dep cover.
Normally, zero depreciation cover costs approximately 15% of the car insurance premium, which is quite high. But it is worth the price since the compensation amount proved to be significantly high as compared to the premium.
