Why is Zero Depreciation necessary for your Motor Policy?

A Car Owner insures his vehicle in a hope that in case of claim settlement, no amount shall be incurred to him for the damage or losses to the vehicle. But the major setback for a Car Owner arises only at the time of Claim Settlement when the Insurer charges them certain amount claiming it to be due to depreciated value of the vehicle and its damaged parts.

Depreciation simply means decrease in the value of any "thing" or "asset" or "material" as they age and get older. As in the world of automobiles, we are aware regarding the vast amount of difference in the price of a New vehicle and a Second-hand or say, used vehicle, the Depreciation component becomes very important in regards to the Motor Policy.

If you wish to ensure your peace of mind at the time of Claim Settlement, the best option for a Car Owner is to go with Zero Depreciation cover which is also known as "Nil Depreciation" or "Nil Dept" cover.

Zero Depreciation Cover provides you the complete coverage of your car and its parts; hence is also known as "Bumper to Bumper Car Insurance" by many Insurers. It leaves out the depreciation parameters from your policy coverage and guarantees complete cover. In this case, Insurer pays the complete cost for the body parts affected due to damage.

Zero Depreciation covers the following:

  • 100% coverage for fiber parts
  • 100% coverage for rubber parts
  • 100% coverage for metal parts

Zero Depreciation does not cover the following:

  • Engine Damage due to water entrance or oil leakage
  • Mechanical breakdown
  • Change of oil and fuel
  • Consumables
  • Wear and Tear
  • Uninsured entities such as accessories, CNG kit, tyres, keys etc.
  • Damage caused by uninsured peril

Zero Depreciation premium is little costlier than the Standard Car Insurance as it provides you the complete coverage of your automobile vehicle irrespective of the depreciated value of the same, but it is still advisable to have the Zero Depreciation in your policy if it's affordable in your budget.

The Premium of Zero Depreciation is generally around 15-20% of your Standard Premium but is still based on the following factors:

  • Your Car model/variant
  • Fuel type of your car
  • Age of your car
  • Location where you drive your car or RTO from where the Car is registered
  • Cubic Capacity of the Car

Zero Depreciation cover is recommended in the following cases:

  • If you are a new driver
  • If you have a new vehicle
  • If you have an expensive vehicle
  • If your car has expensive spare parts or insured accessories
  • If you drive on an accident-prone roadway
  • If you live in an earthquake prone area

Best of Luck on your purchase of Car Insurance Policy!