0 % depreciation insurance is one of the most popular riders availed by consumers for their cars. Read this article to understand the differences between your zero depreciation insurance cover and a standard car insurance policy.

Car homeowners in India have the option of availing insurance for their cars or trucks in three forms – third-party liability insurance, stand alone own damage car insurance and comprehensive car insurance. The Motor Vehicle React of 1988 makes it mandatory for every vehicle-owner to have not less than a third-party cover in place for their vehicle. Other than most of these bảo hiểm 2 chiều policies, there are various add-ons which can be opted with a standalone private damage insurance and comprehensive car insurance. An add-on is an more cover that boosts the protection of the base plan for an added premium. The most popular add-on is zero depreciation insurance (also known as nil depreciation or bumper to bumper motor vehicle insurance).

How is Zero Depreciation Insurance Different from Ordinary Car Insurance?

A standard comprehensive car insurance will cover the losses that a policyholder might incur if his or her vehicle is damaged or simply stolen. However , it is important to note that the individual will not be entitled to collect 100% reimbursement of the expenses borne on the parts swapped. The insurance company will take into account depreciation (normal wear and also tear) that the car parts undergo overtime. Thus, only tenacious value of the car part i. e. after deducting accounting allowance, shall be payable to the policyholder by the insurance provider.

Now, should the policyholder has opted for a zero depreciation cover along with the base insurance policy, the element of depreciation will not be factored in from the insurance provider. In other words, the policyholder will stand to receive 100 % compensation or entire claim amount, without depreciation getting a dent. The policyholder will have to pay slightly more in monthly payments for the add-on. Insurance advisors highly recommended including this totally free depreciation add-on, given that it eliminates the possibility of the vehicle-owner incurring any out-of-pocket expense.

Zero Depreciation Cover Or Standard Car Insurance

Here is a look at how a car insurance policy with a zero depreciation cover is different from a car insurance with no add-ons:

  • Cost consideration: If the policyholder has opted for a zero depreciation cover, then he or she can rest assured that devaluation will have no bearing on the claim settlement, and the full compensation will be paid out. In case the individual does not have this participant with a comprehensive car insurance cover, then he or she will receive the cost insured after a standard deduction of depreciation.
  • Premiums: The money necessary for a car insurance policy with a zero depreciation insurance rider shall be higher than one without it.
  • Car’s age: Only innovative cars (typically up to 3 years) are eligible for absolutely no depreciation cover, while a normal car insurance cover can be acquired taken for both new and old cars.
  • Cost of repairs: The whole cost of external body repairs or replacing fibre, rubber, and plastic parts will be borne with the insurance provider in case of zero depreciation cover. For a normal automobile insurance cover, the policyholder will have to pay for these expenses to a certain extent.
  • The deduction for depreciation will be as follows for the portions replaced
  • For all rubber/ nylon/ plastic parts, tyres along with tubes, batteries and air bags 50%
  • For dietary fibre glass components 30%
  • For all parts made of glass Zero
  • Source: IRDAI

Who Should Opt for Zero Depreciation Insure?

As seen from the points mentioned above, the zero downgrading rider offers many benefits to the policyholder. It is, however , necessary to note that a policy with zero depreciation rider will cost better, about 20% more than a standard no-frills car insurance policy. While this will mean higher premium outgo, individuals can have peace of mind that they will often be fully compensated in the event of loss or damage to their car or truck.