Zero Depreciation Car Insurance: Facts To Know Before Buying It

Zero depreciation insurance helps you get a full insurance claim (without depreciation deduction) on your vehicle. In short, this insurance is also called ‘Zero Dep Insurance‘. It is add-on insurance, which is different from the main vehicle insurance policies (third party insurance, comprehensive insurance, personal accident insurance). It also gives you additional protection from the main insurance cover and for this, you have to pay Extra Premium.

What Is Zero Depreciation Car Insurance?

Table of Contents

If your car’s insurance is going to lapse, then you can think of buying a zero depreciation car insurance. Now you must be thinking what zero depreciation insurance means?

Insurance companies reduce the value of the car each year after the renewal of the policy. In the world of insurance, it has been named depreciation. So, as now you know what zero depreciation means/zero dep insurance means, let’s know more about it.

Under this policy, depreciation is not included in the value of the car. If this causes damage to your car due to an accident or other reason, then the insurance company pays the full amount of the claim.

Insurance companies believe that the price of the car is fixed after one year. Insurance companies decide the different value of the car for each Year. When the owner of the car is claiming a loss in the car, the team reduces the value of the car due to the company’s depreciation.

Summary:

To avoid high-cost payment at the time of settlement or repair, people generally choose the option for Zero Depreciation Car Insurance Plan.

Things to Consider Before Buying Zero Depreciation Cover

Before you opt for the zero depreciation car insurance, it is valuable to consider over below features-

Number Of Claims

As a rule, safety net providers limit the quantity of vehicle protection claims one can make in a year. It is done to discourage policyholders from documenting a case for each and every gouge. Check the number of cases your safety net provider gives and make a point to move toward the backup plan just when the sum is enormous.

Cost

A vehicle protection approach that comes stacked with zero depreciation spread costs more. Since it offers total inclusion without considering depreciation so it charges a somewhat higher premium than a far-reaching approach.

Accessible For New Cars

A zero-depreciation rider is accessible just for new vehicles. From a client perspective, it is likewise not very practical to dish out high premiums on a vehicle that is over 5 years of age.

Why People Buy Zero Depreciation Car Insurance?

People most often buy car insurance because of fear of the law. As you deal with a dealer to buy a car, the other dealers also know the value of the car. You can do the same while buying insurance for the car.

You only need a little bit of information about this. Let us explain how you can buy a good policy. Car insurer companies are also involved in the policies. Let us tell you some essential things related to zero depreciation car insurance.

The price of most machines decreases over time. Not only the total cost of the car decrease, but the price of some parts also decreases. This is the reason that the Indian Insurance Regulatory and Development Authority (IRDA) has set some guidelines related to depreciation, which are followed by all insurance companies.

Some people believe that losses from depreciation can be dealt with by buying a Comprehensive Insurance Policy. But this is not at all. However, the Comprehensive Plan is beneficial for us. The difference between comprehensive and zero depreciation insurance for cars is huge.

Add-On Of Zero Depreciation Car Insurance

Learn about the importance of add-on in zero depreciation car insurance here:

All insurance companies provide zero depreciation add-ons. You can buy it while taking a motor insurance policy. If your vehicle accident occurs, it forces the insurance company to repay the entire amount of repair and replacement of the add-on parts.

This add-on has a special price. So, if you are planning to have zero depreciation car insurance after 3 years then “YES” you can do that as some insurance policies have this facility. But if you do not possess a luxury car then do not extend zero depreciation car insurance after 3 years. It will not worth your money.

However, if you are planning to have zero depreciation car insurance after 5 years then it is a big NO-NO. Zero depreciation car insurance after 5 years is impossible.

BOTTOM LINE:

Zero depreciation car insurance after 3 years is POSSIBLE but not worthy if you do not possess a luxury car and zero depreciation car insurance after 5 years is IMPOSSIBLE.

What Are The Coverage Of Zero Depreciation Car Insurance?

Zero Depreciation Cover, also called ‘zero-depart’ policy, provides full coverage without factoring in depreciation. This means, if your car gets damaged after the collision, then you will get the full cost from the insurer.

In the event of theft, zero depreciation benefits will not be found. It will be paid on an IDV in insurance basis.
Zero depreciation car insurance is given for vehicles under 2 years. Generally, this add-on is not given for vehicles older than 3 years. However, some insurance companies offer zero depreciation car insurance after 3 years. But zero dep car insurance after 5 years is quite impossible.
If the damages arise due to non-listed reasons in the On Dame, the claim will not be accepted for it.
There are no minor breaks like Damage covers. You have to repair them yourself.

Summary:

Before you make a payment, read the policy documents carefully and understand it.

What Are The Rates Of Depreciation?

Here is the rate of depreciation you can get depending on your vehicle’s age.

Age Of The Car	Depreciation Rate
Up to 6 months	05%
More than 6 months but not more than 1 year	15%
More than 1 year but not more than 2 years	20%
More than 2 years but not more than 3 years	30%
More than 3 years but not more than 4 years	40%
More than 4 years but not more than 5 years	50%

FAQ:

Q. What is meant by zero depreciation car insurance?

A. Insurance companies reduce the value of the car each year after the renewal of the policy. In the world of insurance, it has been named depreciation. Read more

Q. Is zero depreciation the same as bumper to bumper?

A. The Bumper to Bumper insurance Policy is also called The “Zero Depreciation Insurance policy”. For more details click here

Q. What is the difference between comprehensive and zero depreciation insurance?

A. A comprehensive coverage auto insurance policy offers complete security against the compensations to the vehicle. Whereas, a zero depreciation insurance company reduce the value of the car each year after the renewal of the policy.

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

A. Zero depreciation car insurance is given for vehicles under 2 years. Generally, this add-on is not given for vehicles older than 3 years.

However, some insurance companies offer zero depreciation car insurance after 3 years. But zero depreciation car insurance after 5 years is quite impossible.

Q. Can I get zero depreciation car insurance after 3 years

A. Zero depreciation car insurance after 3 years is possible but not worthy if you do not possess a luxury car and zero depreciation car insurance after 5 years is impossible.

Q. Is zero depreciation cover different from the comprehensive cover?

A. YES. A comprehensive coverage auto insurance policy offers complete security against the compensations to the vehicle. Whereas, a zero depreciation insurance company reduce the value of the car each year after the renewal of the policy.

Q. Why does zero depreciation insurance make sense?

A. Zero Depreciation Cover, also called ‘zero-depart’ policy, provides full coverage without factoring in depreciation. This means, if your car gets damaged after the collision, then you will get the full cost from the insurer.

Q. What is no claim bonus?

A. If an insurer does not make any claim during any of the years during the insurance period, then such customers get rewards from the insurance companies in the years ahead. This is called No Claim Bonus (NCB).

Check Related Article:-