Zero Depreciation Car Insurance

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What is Zero Depreciation Car Insurance?

Zero Depreciation add-on cover in a comprehensive car insurance policy ensures that the insurer covers the depreciation amount on the assessed parts as per the policy document. The benefits under the add-on can be utilized up to a maximum of specified number of times during the policy period. 

Without the zero depreciation add-on cover, all insurers account for depreciation on your car's parts and settle your claim after making the necessary deductions on account of depreciation. Having the add-on cover will ensure that there are no deductions for depreciation of parts.

Note: Zero Depreciation add-on cover has been filed as Digit Private Car Parts Depreciation Protect with Insurance Regulatory and Development Authority (IRDA) with UIN number IRDAN158RP0005V01201718/A0009V01201718.

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:

Parts wise

Depreciation rate (%)

Rubber, Nylon and Plastic Parts

50%

Fiber Glass

30%

Glass

Nil

Car Paint

50% depreciation on the material cost of total painting charges. 25% of the total painting charges (in case of consolidated bill of painting charges)

% of Depreciation for all the other parts including wooden parts in Vehicles

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

Save Money

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 your insurance company.

Get a Higher Claim Amount

Securing your car with a zero depreciation add-on means the depreciation on your car’s parts won’t be calculated and hence you’ll receive a higher amount during claims. 

Peace of Mind

Opting for a zero depreciation addon ensures you don’t unnecessarily spend from your pocket during claims and honestly just being assured that someone will have your back during your unfortunate times can be so satisfying and really gives you some peace of mind.

What is not covered under Zero Depreciation Add-on Cover?

Under Zero Depreciation add-on cover, certain things in addition to the general exclusions listed under car insurance are not covered. Let us take a look at them in detail:  

If the car insurance policy is invalid

The claim will be not be entertained if the car insurance policy has expired.

If the damage can’t be inspected

In case, the damage caused to the vehicle can’t be inspected before it is repaired, the insurer is not liable to entertain the claim.

Claim will not be settled if the loss is covered under different type of insurance policy

Loss claimed for damage caused to the covered vehicle under different type of insurance policy will not be covered by Digit.

Claim will not be entertained under the add-on if not included under ‘Own Damage’ section of the policy

A claim will not be payable under Zero Depreciation add-on if it is not covered under OD section of the policy.

Claim registered after 30 days of the loss/damage

The add-on cover will not entertain any claim if there is a delay of more than 30 days since the damage was caused.

Depreciation applicable to specific parts

The insurer will not cover depreciation amount applicable to parts like battery and tyres of the insured vehicle as per the  policy.

Cost incurred for repairing damaged parts not approved under the policy

The cost incurred by the policyholder to repair any part, sub-part or accessory in the vehicle which is not approved under the car insurance policy can’t be claimed for.

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:

Age of your car

Since a zero depreciation addon is directly related to the aging of your car and its parts, the age of your car plays a huge factor in determining the premium for your zero depreciation addon cover. 

Model of your car

In a car insurance, a lot depends on the model and type of your car. Since the cost of its parts too will depend on it. Therefore, the kind of car you have also plays a huge factor in determining the cost of your zero depreciation addon cover.

Location of your car

Every city and the risks it is faced with is different. Therefore, in a car insurance, your premium- including the additional premium of your zero depreciation cover will be dependent on the city you drive your car in.

Why is a Comprehensive policy with Zero Depreciation add on cover better than a policy without zero depreciation?

A comprehensive policy is no doubt a great way to protect your car from all possible damages. However, during claims you will still be required to pay for your car’s part depreciation.

Difference between Comprehensive Car Insurance policy with or without Zero Depreciation cover

Comprehensive Policy with Zero Depreciation cover

Comprehensive Car Insurance without Zero Depreciation cover.

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.

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

  • Zero Depreciation add on cover policy will not be valid once you have claimed for the specified number of times as mentioned in the policy document. 

  • A Zero Depreciation only covers the cost of your car’s part depreciation during claims and doesn’t cover your compulsory deductibles.

  • Claim made by the insured under this add on are subject to terms and conditions of your Car Policy.

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 to prevent you from spending any more money.

FAQs about Zero Depreciation Cover in Car Insurance