Zero Depreciation Car Insurance

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What is Zero Depreciation Car Insurance?

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.

What is Depreciation?

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.

% 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%

Benefits of Zero Depreciation Car Insurance Addon

What is not covered in a Zero Depreciation Addon?

How much will a Zero Depreciation Addon Cover Cost? Is it worth it?

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.

Know more about:

What are the factors affecting your Zero Depreciation Car Insurance Premium?

Following are the factors that will affect the premium of your zero depreciation addon cover:

Why is a Zero Dep Car Insurance better than a standalone Comprehensive Car Insurance Policy?

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.

Difference between Zero Depreciation and Comprehensive Car Insurance

	Zero Depreciation Car Insurance	Comprehensive Car Insurance
What is it?	A zero depreciation cover is an optional addon you can opt for in your car insurance policy. Having this addon in your plan ensures your insurer won’t charge for your car’s depreciation during claims and hence, you won’t be liable to pay for the cost of depreciation of your car’s parts during claims.	A comprehensive car insurance policy is a type of car insurance policy that covers for your car’s own damages and third-party damages. This type of policy can further be customized for extensive coverage.
Premium	On opting for this addon, your comprehensive car insurance premium will increase by approximately 15%.	The premium for a standalone comprehensive car insurance policy is lower than that of a comprehensive car insurance policy with addons.
Cost of Depreciation	Having a zero depreciation addon means you don’t need to pay for the cost of depreciation during your car insurance claims.	In a comprehensive car insurance policy, you will be required to pay for the cost of depreciation of your car’s parts during car insurance claims.
Age of the Car	A zero depreciation addon can be opted for all cars that are less than five years old.	A comprehensive car insurance policy can be opted for all cars that are less than fifteen years old.
How much do you save?	While you pay a slightly higher premium, your long term savings are high as you aren’t required to pay for your car’s depreciation costs during claims.	The only saving you have is the extra premium you would save on by not opting for addons.

Role of a Zero Depreciation Cover During Claim Settlement

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 😊

Things to Remember about Zero Depreciation

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.

Who should opt for a Zero Depreciation Cover?

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! 😊

FAQs about Zero Depreciation Cover in Car Insurance

✓ Can I get a zero depreciation car insurance after 5 years?

No, you can only opt for the zero depreciation add on in your car insurance policy if your car is less than 5 years old.

✓ Can I get zero depreciation car insurance after 3 years?

Yes, as long as your car is below 5 years old – you can opt for a zero depreciation add-on in your comprehensive car insurance policy.

✓ Is there any restriction on number of claims? How does a zero-dep insurance policy affect the claim settlement process?

No, there is no limit no number of claims as long as the total claims amount is up to your sum insured. Having a zero depreciation add-on as part of your plan ensures that during a claim settlement, you get your complete claim amount- without subtracting or accounting for your car’s depreciation.

✓ Is zero depreciation cover different from comprehensive cover?

Yes, a zero depreciation cover is an add-on you can opt for in your comprehensive policy while a comprehensive cover is nothing but your standard car policy that covers for both third-party and own damages. You can customize your level of coverage further by opting for add-ons such a zero depreciation cover, amongst other covers.