Everything eventually loses its value over time be it your most valuable asset, such is the nature of life. We all buy new things and get used to using them in two days’ time and then they are no longer new for us. The monetary value of items is also calculated based on their age, condition, and usage. The more an item is used, the lesser monetary value it will hold.
What is Depreciation in Insurance?
Depreciation in insurance is the loss of value of a car with time, as each part of the car wears out with tiIn checkingme, the value of your car also diminishes. And this is not only with a car, but the same also goes for your mobile, laptop, bike and any other assets. Depreciation is the decrease in value due to decay or regular wear and tear of your vehicle.
Think about this! You bought the latest iPhone XS in approx. Rs. 90,000 today, do you think if you go to the market after two years you would be able to sell it for Rs. 90, 000 only? Of course not. It is a universal fact! Used items will have less value. The price of your iPhone will decrease because of obvious reasons, after two years it will not be as good as new.
How fast does your car value decrease?
Same as your iPhone, your car’s value too decreases very fast. When you buy the car it is new and after a few minutes, it is already used. The value of your car decreases to 91% of the initial market value the minute you purchase it. Its value drops quickly once it is used.
The car value continues to drop year after year. Car depreciation calculator uses the following values: