Get Zero Depreciation Car Insurance

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Zero Depreciation Car Insurance

Driving to office in a good mood, it is Friday, yeah! Like a good driver, you stopped at a red light. BOOM! Someone just hurt your back, bad. Now, you can keep fighting whose fault it was, but the damage is done. All you can do is drag back your fallen bumper back home.

One may think that one’s car insurance policy, a comprehensive one, will cover for all damages. But recheck, if you don’t have a Zero-dep add-on, that bumper loss will not be paid in full. Your insurance provider, under a normal cover, will account for the depreciation of your bumper (a plastic part, usually depreciating at 50% a year) and then pay you. But the rest is for you to pay, which can be almost around INR 6,000 (If say you bought a car for 10 lacs and your bumper cost is 12,000).

What is Depreciation?

Depreciation is the wearing away of your car’s value due to age. The older your car is, the higher is your depreciation rate.

How is depreciation calculated?

Well, the Insurance Regulatory and Development Authority of India (IRDAI) has ordained that

  • On rubber, nylon, and plastic parts, and batteries – 50% depreciation be deducted
  • On fibre glass components – 30% depreciation be deducted, and
  • On wooden parts – depreciation be deducted as per the age of car (such as 5% in the first year, 10% in the second year, and so on.)

This is when a Zero-Depreciation add-on of just INR 3000, could have come to your rescue, completely ignoring your bumper’s depreciation and making the insurance provider pay the full INR 12,000.

% of Depreciation in Vehicles

Age of Vehicle

% of Depreciation

Not Exceeding 6 months

5%

Exceeding 6 months but not exceeding 1 year

15%

Exceeding 1 year but not exceeding 2 years

20%

Exceeding 2 years but not exceeding 3 years

30%

Exceeding 3 years but not exceeding 4 years

40%

Exceeding 4 years but not exceeding 5 years

50%

% of Depreciation in Vehicles (Metallic Parts)

Age of Vehicle

% of Depreciation

Below 6 months

Nil

Exceeding 6 months but not exceeding 1 year

5%

Exceeding 1 year but not exceeding 2 years

10%

Exceeding 2 years but not exceeding 3 years

15%

Exceeding 3 years but not exceeding 4 years

25%

Exceeding 4 years but not exceeding 5 years

35%

Exceeding 5 years but not exceeding 10 years

40%

More than 10 years

50%

So, then what is a Zero Depreciation car insurance?

A Zero Depreciation cover is nothing but an addon with your car insurance that can be availed by paying a little extra premium. This addon cover lets you leave depreciation behind, and in times when you need to claim your car insurance, you get a payment without accounting for any depreciation.

And the bumper is just one depreciating part, there are many in your car, that windscreen, those rubber parts, wooden parts, so many of them, all adding to the bill in case of massive damage or say Total Loss.

Now some may argue that the probability is low, for Total Loss. Well, yes, you could by all means have a touch-free year, not a single scratch on the back. But have we heard of something called peace of mind?

Benefits of Zero depreciation Car Insurance Addon

Having a Zero Depreciation Addon ensures that you do not have to shell out money from your pocket in case there is a claim, as without a Zero Dep addon the cost of depreciation of the parts has to be borne by you. But with a Zero Dep Addon, that is taken care by the insurance company.

Anyone and everyone who wants to keep their car shining and new, without spending anything from their own pocket.

What is not covered by Zero Depreciation Addon

  • If you do not have a valid driver's license
  • If you are claiming for your car tyres or battery

So how much will a Zero Depreciation addon cover cost you? Is it worth?

For a ~15% of additional premium, you are buying protection for something that you prize in your life, your car. And also, when one works out the maths in case of an accident, a Zero-depreciation add-on is totally worth it.

What are the factors to cover before opting for a Zero Depreciation Addon?

Some factors that should be taken into account before opting for a Zero Dep Addon are:

  • Age of the car
  • Type of car you own
  • Frequency of selling your car or buying a new car
  • The value of the car parts
  • So, all you drivers out there, do give Zero-dep a thought next time you renew your policy.


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