A zero depreciation car insurance is a comprehensive car insurance policy, with the zero depreciation add-on cover included. This implies that your car will be devoid of its general depreciation during car insurance claims.

Without the zero depreciation cover, all insurers account for depreciation on your car's parts and therefore pay you your claim only after subtracting the amount of depreciation. With the add-on, no depreciation is subtracted, and you get more money during claims.

Depreciation is the decrease in cost of your car, due to its natural wear and tear due to its age. The older your car is, the higher is its depreciation. 

How is Depreciation Calculated?

According to the Insurance Regulatory and Development Authority of India (IRDAI), following are the depreciation rates, on the basis of which the total depreciation of your car is calculated:

• Rubber, Nylon, and Plastic Parts, and Batteries: 50%
• Fiber Glass Components:  30%
• Wooden Parts: 5% in the first year, 10% in the second year, and so on.

Generally, the cost of opting for a zero depreciation addon cover in your comprehensive policy will be approximately an additional 15% over your comprehensive car insurance premium.

When you’re paying just a 15% additional premium for your car’s overall protection, it’s completely worth it since the amount you will save during claims will be much higher than the cost of the addon. 

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A standalone comprehensive policy is no doubt a great way to go about in protecting your car from all possible damages. However, during claims- you will still be required to pay for your car’s part depreciation. That’s why opting for a zero depreciation addon cover within your Comprehensive Car Insurance Policy is a better option as it won’t only give your car maximum coverage but will also save you from paying for your car’s depreciation cost during claims.

The main role of a zero-depreciation cover during claims is to save the money you’d be spending from your pocket. Let’s take an example to make this simple for you;  If your total claim amount payable is Rs 20,000 and the total cost of your car’s part depreciation is Rs 6,000 then, without having a zero-depreciation cover- your insurer will account for this cost and only pay you Rs 14,000. However, if you have a zero depreciation cover then, you will receive the entire Rs 20,000 as your claim amount 😊

• A Zero Depreciation addon cover is only applicable for cars less than five years old.
  
• A Zero Depreciation only covers for the cost of your car’s part depreciation during claims and doesn’t cover for your compulsory deductibles.
  
• A Zero Depreciation addon cover cannot be opted for cars more than five years of age. 

• If you are planning to buy a new car soon, then you should definitely opt for a zero-depreciation cover in your comprehensive car insurance policy. You’re already spending a whole lot of money for your new car, spending a little more on its insurance with the right add-ons will help you and prevent you from spending any more money.
• If you’ve recently bought a new car or if your car is less than 5- years old then opting for a zero depreciation cover in your comprehensive car insurance policy will help you save during your car insurance claims. This is because, the cost of your car’s depreciation will increase with time but, having a zero depreciation add on ensures you don’t have to pay for it during claims! 😊