Zero depreciation car insurance can be worth the extra premium when you want to reduce your out-of-pocket expenses during a claim. If you have a standard comprehensive policy, insurers will deduct depreciation from the value of certain parts before settling a claim. So, you will end up paying the remaining amount.
A zero dep add-on gives coverage for the depreciation deduction on eligible parts. However, whether the additional premium amount makes sense or not depends on various factors. The conditions include your car’s age, usage, driving conditions and claim requirements.
How Does Zero Depreciation Car Insurance Affect Your Claim?
Imagine you own a 1-year-old car and get into a small accident. Your bumper costs ₹20,000, the headlight casing costs ₹7,000 and painting costs ₹13,000. The total repair bill is ₹40,000.
With a standard policy, the insurer may apply 15% depreciation to eligible plastic parts. So, you could end up paying around ₹6,000 yourself, apart from the compulsory deductible.
Now, suppose you paid ₹2,000 extra for a zero depreciation add-on. In this case, the depreciation deduction on eligible parts is removed and the insurer pays the entire ₹40,000. This leaves you to pay only the compulsory deductible amount.
Therefore, the extra ₹2,000 premium is actually saving you around ₹6,000.
Note: However, for cars older than 5 years, many insurers might not offer a zero depreciation add-on.
Who Should Buy Zero Depreciation Insurance Cover?
Zero depreciation car insurance can be especially useful for individuals who own a new car, as they have expensive plastic and rubber parts such as bumpers, trims and spoilers. These parts face high depreciation deductions during a claim. A zero dep add-on ensures you do not pay too much out of pocket. Others who can benefit from this car insurance are:
- Has Bought a Car on Loan
Car loans usually require comprehensive insurance. Some lenders might also suggest that you purchase additional protections such as zero depreciation riders. This is particularly true if you buy a newer and advanced car model.
- Drives in Urban Cities
Heavy traffic, crowded parking areas and construction zones can increase the chance of small accidents. If you often drive in such conditions, purchasing a zero depreciation plan from top insurers in India such as Bajaj General Insurance can help reduce deductions when you make a claim.
What to Consider Before Buying Zero Depreciation Insurance?
Here are some of the factors to consider before getting this add-on:
- Consider Your Driving: Think about how often you drive, where you drive and your chances of making a claim.
- Compare the Claim Benefit: Ask yourself whether one possible claim could save you more than the extra premium you will pay each year.
- Check Eligibility: Zero depreciation may not be available for older cars or every model. Check the insurer’s age and vehicle rules before buying.
- Review Premium: A practical guideline is to compare the add-on cost with your car’s IDV. A high premium can reduce the financial value of the cover.
Final Words
Zero depreciation car insurance can reduce the impact of depreciation deductions during eligible claims, but it comes at an additional cost. Newer, expensive cars usually benefit more than older or low-value cars.
Everything, including your driving habits, car value, age and insurer’s rules, matters. So, before buying, always compare the extra premium with the possible claim savings and read the policy terms carefully. This helps you choose a cover that is best suited for you.
