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.
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. |
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