Zero Depreciation Car Insurance

Know everything about zero depreciation car insurance, its benefits and coverage. Check how you can buy zero dep insurance.
Zero Depreciation Car Insurance
3 mins

Your car value starts depreciating immediately after taking it out of the showroom. This also impacts your insurance claim. Insurers usually deduct the car or its part’s depreciation value when settling the claim for a car accident or theft. This is precisely why zero depreciation car insurance has recently become a popular choice among car owners. It offers complete coverage for the repair or replacement cost of the depreciable parts of the car.

What does zero depreciation insurance mean?

Zero depreciation insurance is an add-on cover. It ensures that during claim settlement, the insurer does not deduct the depreciating value of the car and its parts. Many comprehensive car insurance policies also now offer zero depreciation cover within the policy.

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Who should opt for a zero depreciation car insurance?

Here is who can benefit from zero dep insurance:

• New car owners

For new car owners, a zero depreciation cover is a good investment. This is because the value of a new car is usually high.

• High-end car owners

If you bought an expensive or luxurious car, a zero dep car insurance will benefit you. The cost of the car parts of an expensive car is usually high. A zero dep insurance ensures you get complete coverage against any damages to these car parts.

• Frequent drivers

People who drive regularly or more often can opt for a zero dep car insurance. This is because the more you drive, the more chances of minor bumps and dents to the car.

• First-time car owners

If it is your first car, ensure you secure the vehicle with an insurance policy that gives complete financial coverage.

Benefits of zero depreciation car insurance

Zero dep insurance offers several benefits to car owners:

• Comprehensive coverage

A zero dep insurance provides comprehensive coverage to the insured vehicle, covering the depreciable parts as well. You get the entire claim amount in case of damages or accidents without losing the depreciation value.

• Complete financial protection

Zero depreciation car insurance gives complete financial security to car owners against any damages or accidents. It helps especially people who have high-end or luxury vehicles.

• No deduction of depreciation

Insurers usually deduct the depreciation value of the car from the total claim amount during settlement. However, in a zero depreciation policy, the insurer does not consider depreciation and offers full coverage to the insured vehicle.

• Peace of mind

As a car insurance policy ensures you have complete financial security, you can stay stress-free. The insurer will compensate for the financial losses incurred during any accident or theft.

Read more: Car insurance types

Zero depreciation car insurance vs comprehensive car insurance

Here’s a quick look at the difference between zero depreciation car insurance and comprehensive car insurance.

Features Zero dep insurance Comprehensive insurance
Policy type Add-on cover Comprehensive coverage
Premium Relatively higher As per the coverage chosen
Coverage Covers repair or replacement cost of plastic parts or parts that have depreciating value. Cover damage caused to the insured vehicle and third party.
Car’s age You can buy this add-on cover for cars up to five years old. You can buy a comprehensive car insurance for cars up to 15 years old.
Claim amount Get compensation for the total loss up to the sum insured without deducting the depreciation value. Get compensation for the total loss up to the IDV after the deduction of depreciation value.


Read also: Compare Car Insurance Online

How is zero depreciation car insurance premium determined?

Zero depreciation car insurance, also known as zero dep insurance, offers comprehensive coverage without factoring in depreciation for parts. Here's how the premium for zero depreciation car insurance is determined:

Vehicle age

The age of your vehicle significantly impacts the premium. Newer vehicles usually attract lower premiums, while older vehicles may have higher premiums due to increased risk.

Vehicle model and make

The model and make of the car also play a crucial role. Luxury or high-end cars typically have higher premiums due to the expensive parts and repair costs.

Insured Declared Value (IDV)

The IDV of the vehicle is another determining factor. A higher IDV will generally result in a higher premium, as it represents the maximum sum assured.


The geographical location where the vehicle is registered and primarily used affects the premium. Areas with higher traffic density or higher theft rates may have higher premiums.

Add-on covers

Adding zero dep insurance as an add-on cover to your basic policy will increase the overall premium. The cost of this add-on depends on the car’s age and model.

Policyholder's driving history

The driving history of the policyholder, including any previous claims and accidents, can influence the premium amount.

Insurance provider

Different insurance providers may offer varying premium rates for zero depreciation cover based on their own risk assessment criteria and policies.


Opting for a higher voluntary deductible can lower the premium, but it also means you will pay more out of pocket in the event of a claim.

By considering these factors, insurance companies calculate the premium for zero depreciation car insurance to ensure comprehensive coverage with minimal out-of-pocket expenses for repairs and replacements.

Exclusions of zero depreciation add-on cover

While zero depreciation add-on cover is an excellent policy for complete financial protection, it also has certain exclusions that policyholders need to be aware of. Some common exclusions of zero depreciation add-on cover are:

• Wear and tear

Zero depreciation add-on cover does not cover damages caused due to regular wear and tear of the car. This includes mechanical breakdown or damage due to age-related issues.

• Driving without a licence

Zero depreciation cover is not applicable if you drive without a licence or are under the influence of alcohol/drugs.

• Driving outside of geographical limits

It does not cover the damages caused or accidents that occurred outside the geographical limits specified in the policy document.

• Illegal activities

It does not cover any damages caused due to illegal activities, such as participating in a race or committing a crime.

• Commercial use of the car

It does not cover damages or accidents caused to cars used for commercial purposes. This includes using the car as a taxi or goods carrier.

• Consequential loss

It does not cover any consequential losses, such as loss of income or business opportunities due to accident or theft.

Read more: Commercial car insurance

How to get zero depreciation car insurance online?

Securing zero depreciation car insurance online is a straightforward process. Here’s how you can do it:

  1. Visit insurance provider websites or comparison websites
    Go to trusted insurance provider websites or insurance comparison websites.
  2. Enter vehicle details
    Provide your car's make, model, year of manufacture, and registration details.
  3. Choose the zero-depreciation add-on
    Select the zero depreciation (zero dep insurance) add-on cover option.
  4. Compare plans
    Review and compare different insurance plans from various providers to find the best option.
  5. Calculate premium
    Use the online premium calculator to check the cost of the policy with the zero-dep insurance add-on.
  6. Fill personal details
    Enter your personal information and contact details as required.
  7. Make payment
    Pay the premium online through net banking, credit/debit card, or other available payment options.
  8. Receive policy document
    Once the payment is successful, the policy document will be emailed to you.

How to renew zero dep car insurance online?

  • Log in to Insurance Portal
    Visit your insurer’s website or insurance comparison portals.
  • Enter policy details
    Provide your current policy number and vehicle details.
  • Select Zero Dep add-on
    Ensure to include the zero depreciation (zero dep insurance) add-on cover during renewal.
  • Review and update information
    Check your personal and vehicle details and make any necessary updates.
  • Calculate renewal premium
    Use the premium calculator to see the updated premium with the zero dep insurance cover.
  • Make payment
    Pay the renewal premium online using the available payment methods.
  • Receive renewal confirmation
    Once the payment is completed, the renewed policy document will be sent to your email.

Factors affecting zero depreciation car insurance premium

Here are some of the factors that affect the premium of zero depreciation car insurance:

• Age of the car

The age of the car plays a significant role in determining the premium of zero depreciation car insurance. The premium will be higher for new cars and will decrease as the car gets older.

• Make and model of the car

The make and model of the car can also affect the premium. Luxury cars and high-end models may have a higher premium than regular cars.

• Geographic location

The location of the car can also affect the premium. The premiums are higher for a high-risk area or an area prone to theft or damage.

• Driving record

The driving record of the car owner is another important factor that can affect the premium. If the car owner has a history of accidents or traffic violations, the premium will be higher.

• Deductible amount

The deductible amount is the amount that the car owner agrees to pay out of pocket in case of an accident. A higher deductible can result in a lower premium.

• Coverage amount

The coverage amount refers to the maximum amount that the insurance company will pay for damages to the car. A higher coverage amount can result in a higher premium.

Things you must know about zero depreciation car insurance

Here are a few things that you must remember about zero depreciation car insurance.

  • The validity of zero depreciation car insurance gets over once you have claimed the sum insured on the policy document.
  • Zero depreciation insurance will only cover the depreciation value of the car and not the deductibles mentioned in the policy.
  • Ensure to read the terms and conditions of the add-on cover.

Check out some affordable car insurance policies online.

Claim settlement with Zero-Depreciation Car Insurance

Zero depreciation car insurance, often referred to as zero dep insurance, offers a significant advantage during claim settlement. When you file a claim under this policy, the insurer covers the entire cost of replacing car parts without accounting for depreciation. This means that you receive the full value for damaged parts, ensuring minimal out-of-pocket expenses. For example, if your car’s bumper gets damaged, a standard policy would deduct depreciation before reimbursing you. However, with zero dep insurance, the full cost of the new bumper is covered. This benefit makes zero depreciation car insurance a worthwhile investment for car owners.

Depreciation rates in car insurance

Depreciation rates determine how much value is deducted from the insured amount for various car parts during a claim settlement. Here’s a detailed table showing standard depreciation rates, highlighting the importance of zero depreciation car insurance (zero dep insurance):


Car Parts

Depreciation Rate

Plastic parts


Tyres, tubes, and batteries


Fiberglass components


Wooden parts

Based on Age of Vehicle


Age of Vehicle

Depreciation Rate on IDV

Less than 6 months


6 months to 1 year


1 to 2 years


2 to 3 years


3 to 4 years


4 to 5 years


By opting for zero dep insurance, you avoid these deductions, ensuring maximum compensation without any depreciation on the replaced parts.

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Frequently asked questions

How does zero depreciation car insurance work?

A zero depreciation insurance gives coverage for the depreciable parts in case of an accident or theft. Usually, insurers deduct the car’s depreciating value from the claim amount when settling the claim. If you have a zero dep insurance, your insurer will not deduct any depreciating value from the claim amount for repairing/replacing the damaged parts.

Who should opt for zero depreciation car insurance?

Buy a zero depreciation insurance if bought a new or luxurious car, or a second-hand car. This policy will benefit you greatly, as you will get coverage without depreciation value getting deducted.

Is zero depreciation car insurance expensive?

The premium depends on several factors, including the car’s age, model, and usage. Also, the coverage amount you choose. The premium may differ from insurer to insurer, so choose a policy that fits your budget.

Is there a limit to the number of claims that I can make under zero depreciation car insurance?

Most insurers offer up to two claims a year. However, the clause for making claims in the year depends on the insurer you choose.

Can I add zero depreciation cover to my existing car insurance policy?

You can add the zero depreciation cover to a comprehensive car insurance policy. You can buy the add-on cover when buying or renewing the comprehensive car insurance policy.

Can I buy a zero depreciation insurance for my car after five years?

The insurer will assess your car before offering you a zero depreciation car insurance. Usually, you must buy a zero depreciation car insurance for a new car, so you stay well covered.

What does zero depreciation car insurance policy cover and not cover?

A zero depreciation policy offers full coverage for your car against damage caused by natural calamities, accidents, and other unforeseen events. It covers the cost of repair or replacement of parts without taking into consideration the depreciation of the vehicle.

A zero depreciation policy does not cover damages caused by regular wear and tear of the car, damages to the engine due to oil leakage, damages caused by negligence or drunken driving, and damages caused by illegal activities.

Can I convert third-party car insurance to zero depreciation insurance?

No, you cannot convert third-party car insurance to zero depreciation insurance. You need to purchase a separate zero depreciation policy. But you can buy zero dep insurance as an add-on cover only on comprehensive car insurance.

Do I get a No Claim Bonus benefit in a zero depreciation car insurance policy?

No Claim Bonus is applicable on a comprehensive car insurance policy. You get the benefit if you do not make any claim during the policy period. You can accumulate up to 50% NCB for having claim-free years.

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