Owning a car in India is a significant milestone for many. It symbolizes mobility and a sense of accomplishment. However, with this ownership comes the responsibility of protecting the vehicle against potential damages and losses. While regular car insurance offers some level of coverage, it often falls short of compensating for the depreciation of car parts. This is where zero depreciation car insurance, also known as nil depreciation insurance, comes into play. It ensures you receive the full claim amount without any deduction for the depreciation of parts.
Despite its benefits, many people are still unaware of how to protect their vehicles with the right insurance policy. This lack of awareness often leads to inadequate coverage and unexpected financial burdens during claims.
We, at RenewBuy, aim to make you aware of the finer details of different types of motor insurance policies to help you decide right.
What is Zero Depreciation in Car Insurance?
Zero dep car insurance, often referred to as Bumper-to-Bumper insurance, is a specialized motor insurance add-on cover that ensures the policyholder receives the full claim amount without any deduction for the depreciation of parts.
Let’s understand the importance and need for this add-on first.
In standard car insurance policies, the claim amount is reduced based on the depreciation of the vehicle's parts. It means the older the car or its parts, the less compensation you receive. This can lead to significant out-of-pocket expenses, especially for repairs involving parts that depreciate over time, like plastic, rubber, and metal components.
With zero depreciation car insurance, the insurer covers the cost of replacing or repairing damaged parts without considering their depreciation value. This add-on policy is beneficial for new and relatively new cars, typically up to five years old (although some insurers may offer it for older vehicles). By opting for this coverage, you can avoid the financial strain of paying for the depreciated value of parts and ensure your vehicle is restored to its pre-damage condition without compromising quality.
Next to knowing zero depreciation car insurance meaning, the first thing that might come to your mind is:
Should You Buy Zero Depreciation Car Insurance?
Deciding whether to purchase zero depreciation car Insurance depends on your vehicle's age, usage, and financial priorities. Here are a few key points you can consider before buying it:
New or Relatively New Cars
If you own a new or relatively new car (a few years old), zero dep car insurance is highly recommended. New vehicles have a higher value, and repair costs can be significant. This policy ensures you receive full compensation for any damages without depreciation deductions.
High-Value Cars
Owners of high-end or luxury cars should strongly consider this coverage. The cost of repairing or replacing parts in these vehicles can be very high, and zero depreciation car insurance ensures you aren't burdened with hefty out-of-pocket expenses.
Frequent Use
If you use your car frequently or for long commutes, the risk of accidents or damage increases. This policy provides peace of mind by covering the entire cost of repairs, making it easier to manage potential damages from regular use.
Financial Protection
This car insurance add-on can offer significant benefits for those who prefer complete financial protection. It eliminates the surprise of depreciation costs during claims, ensuring you receive the full value of repairs or replacements.
Cost-Benefit Analysis
While zero depreciation car insurance comes with a higher premium compared to standard policies, the benefits often outweigh the additional cost. You can weigh the premium increase against the potential savings on repair costs to determine if it’s a worthwhile investment.
Zero Depreciation Car Insurance vs. Comprehensive Insurance: Comparison
| Parameter | Zero Depreciation Car Insurance | Comprehensive Insurance |
|---|---|---|
| Coverage for Depreciation | Covers full cost of parts without depreciation deduction | Deducts depreciation value of parts from the claim amount |
| Premium | Higher premium due to added benefits | Comparatively lower premium compared to zero dep insurance |
| Out-of-Pocket Expenses | Minimal, as depreciation is not considered in claims | Higher, as the policyholder must bear the cost of depreciation |
| Ideal for | New or relatively new cars, high-end or luxury vehicles | Older vehicles, those looking for more affordable insurance options |
| Parts Covered | Covers all parts including plastic, fiber, and metal parts | Only partially covers parts based on their depreciated value |
| Who Should Select? | Worthwhile for those willing to pay a higher premium for full coverage | More economical option, but with higher potential out-of-pocket expenses |
Which Factors Determine Zero Dep Car Insurance Premium?
Several factors influence zero depreciation car insurance premiums. Understanding these factors can help you anticipate insurance costs and make an informed decision.
Vehicle Age and Model
Zero depreciation cover is typically available for new and relatively new vehicles, usually up to five years old. Older vehicles might not be eligible for this add-on. Similarly, high-end and luxury cars often have higher premiums due to the expensive parts and repair costs associated with these vehicles.
Vehicle Make and Variant
The make and variant of the vehicle play a significant role in determining the premium. More expensive and complex models generally attract higher premiums.
Insured Declared Value (IDV)
The IDV is the maximum amount your car insurer will pay in case of total loss or theft of the vehicle. A higher IDV results in a higher car insurance premium.
Location
The geographical location where you register your vehicle and primarily use it affects the premium. Areas with higher accident rates or theft incidents may lead to higher premiums.
Add-On Covers
Opting for other car insurance add-ons alongside zero depreciation, such as engine protection, roadside assistance, or return to invoice, will increase the overall premium.
Deductibles
Voluntary deductibles, which are the portion of the claim you pay out of pocket, can lower the premium. Choosing a higher deductible can reduce the premium but increases your out-of-pocket expense in case of a claim.
What is the Maximum Number of Zero Dep Claims You Can File?
The number of zero dep claims you can file in a policy year varies depending on the chosen insurer. While some insurance providers allow car owners to raise unlimited claims, others limit the number to maintain a balance between premium and coverage.
Here’s a comparison of different insurers and their respective limits on zero dep and non-zero dep claims:
| Insurer | Number of Zero Dep Claims | Number of Non-Zero Dep Claims |
|---|---|---|
| Bajaj Allianz Car Insurance | 2 | No restriction |
| Chola MS Car Insurance | 2 | No restriction |
| Future Generali Car Insurance | 2 | No restriction |
| Go Digit Car Insurance | 1 or 2 (as per policy document) | No restriction |
| HDFC Car Insurance | No restriction | No restriction |
| Iffco Tokio Car Insurance | No restriction | No restriction |
| ICICI Lombard Car Insurance | 2 | No restriction |
| Kotak Mahindra Car Insurance | 2 | No restriction (cashless up to 2)** |
| Liberty Car Insurance | No restriction | No restriction |
| Magma Car Insurance | No restriction | No restriction |
| National Car Insurance | 2 | No restriction |
| New India Car Insurance | 2 | No restriction |
| Oriental Car Insurance | 2 | No restriction |
| Raheja Car Insurance | No restriction | No restriction |
| Reliance Car Insurance | 2 | No restriction |
| Royal Sundaram Car Insurance | No restriction | No restriction |
| SBI Car Insurance | No restriction | No restriction |
| Shriram Car Insurance | 2 | 2 |
| United Car Insurance | No restriction | No restriction |
| Universal Sompo Car Insurance | No restriction | No restriction |
| Zuno Car Insurance | 2 | No restriction |
Note: Information in the table above is sourced from reliable sources; subject to change.
More About Depreciation Rates in Car Insurance
Depreciation rates in car insurance refer to the reduction in the value of your car parts over time, which directly affects the claim amount you receive during an insurance claim. When you file a claim for damages, the insurance company calculates the depreciation on the parts that need replacement or repair. These rates influence the out-of-pocket expenses you might incur during a claim. In contrast, opting for a zero depreciation car insurance cover can shield you from these costs, as it ensures full reimbursement without considering the depreciated value of parts. Let’s dive deeper.
IRDAI-Approved Rate of Depreciation for Car Parts
| Parts | Depreciation Ratee |
|---|---|
| Rubber, plastic, battery, nylon | 50% |
| Fiber parts | 30% |
| Wooden parts | 5% (Year 1), 10% (Year 2), and so on |
Rate of Depreciation in Cars Based on Age
| Car Age | Depreciation Rate |
|---|---|
| Less than 6 months | 5% |
| Between 6 months to 1 year | 15% |
| Between 1 year and 2 year | 20% |
| Between 2 year and 3 year | 30% |
| Between 3 year and 4 year | 40% |
| Between 4 year and 5 year | 50% |
| More than 5 years | As decided between you and the insurer |
What is Not Covered in Zero Depreciation Car Insurance?
While zero depreciation car insurance provides extensive coverage by eliminating depreciation deductions on parts, there are still certain exclusions that policyholders should be aware of.
Regular Wear and Tear
This add-on does not cover normal wear and tear of the vehicle due to regular use (including items such as brake pads, tires, and clutch plates).
Mechanical or Electrical Breakdown
Any mechanical or electrical failure or breakdown of the vehicle is excluded from zero dep car insurance coverage. These issues are typically covered under warranty.
Consumables
Items like oil, lubricants, coolant, and other consumables are generally not covered under this add-on unless a specific consumables cover is added to the policy.
Uninsured Accessories
Accessories that are not factory-fitted and not specifically covered under the insurance policy are excluded. This includes aftermarket modifications and enhancements.
Damages Due to Illegal Activities
Any damages resulting from activities that violate the law, such as driving under the influence of alcohol or drugs, are not covered.
Intentional Damage
Damages caused intentionally by the policyholder or due to gross negligence are excluded from coverage.
Depreciation Beyond Policy Terms
Zero depreciation car insurance cover may not be available for vehicles beyond a certain age, typically over five years. The specific age limit depends on the insurer's policy terms.
For more information about the inclusions and exclusions, you can refer to the policy document.
How to Buy Zero Depreciation Car Insurance?
Here’s a step-by-step guide to help you buy zero depreciation car insurance:
Step 1: Evaluate Your Needs
Assess your vehicle's age, make, and model to determine if this add-on is essential for your vehicle based on its value and usage.
Step 2: Research and Compare
Research various insurance providers and compare their Zero Depreciation policies. Look at the coverage details, claim settlement ratios, customer reviews, and premiums. Websites and online comparison tools can help simplify this process.
Step 3: Check Eligibility
Ensure your vehicle meets the eligibility criteria for this add-on cover. Most insurers offer this add-on for cars up to five years old, though this can vary. .
Step 4: Get Quotes
Request quotes from multiple insurers using a car insurance calculator. Compare the quotes to find the most cost-effective car insurance policy that offers comprehensive coverage.
Step 5: Understand the Terms
Read the policy document carefully. Pay attention to the number of claims allowed, exclusions, and other terms and conditions. Make sure you understand what is and isn’t covered.
Step 6: Fill Out the Application
Once you’ve selected an insurer, fill out the application form. Provide accurate details about your vehicle and personal information to avoid any issues during claims.
Step 7: Submit Documents
Submit the required documents, which include your car’s registration certificate, previous insurance policy (if any), and identity proof.
Step 8: Review and Pay
Review the final policy details and premium. Make the premium payment using the available options, such as UPI, net banking, or credit/debit cards.
Step 9: Receive Policy Documents
After successful payment processing, you will receive your policy documents via email. Keep these documents safe and easily accessible.
How to Renew Zero Depreciation Car Insurance?
Renewing your zero depreciation car Insurance is much like renewing a standard car insurance policy. Follow these steps to renew your Nil Depreciation cover with us:
Step 1:
Go to the RenewBuy website for car insurance renewal or simply click here. Enter your vehicle's registration number to proceed further.
Step 2:
Browse through the available plans and select the comprehensive plan with zero depreciation cover.
Step 3:
Pay the premium online to instantly renew your policy.
Recommended Read: All About Car Insurance Renewal
More About Claim Settlement Under Zero Dep Car Insurance
During a typical claim settlement, insurers deduct the depreciation applicable on car parts, with the depreciation rates specified in the policy wording. However, with zero depreciation car insurance, you receive the full claim amount without any deductions for depreciation. This means you won't need to pay out of pocket for car repairs. Additionally, the claim process becomes simpler, as you don't have to worry about depreciation-related deductions.
Why Buy Car Insurance From RenewBuy?
Competitive Premiums
RenewBuy offers car insurance policies at competitive prices, ensuring you get the best value for your money.
Wide Range of Options
Access a variety of car insurance plans from leading insurers, allowing you to choose the one that best fits your needs.
Easy Comparisons
Compare multiple policies side-by-side to find the most suitable coverage, premiums, and benefits.
Hassle-Free Process
Enjoy a simple process for purchasing and renewing car insurance policies with RenewBuy.
Expert Assistance
Benefit from the guidance of insurance experts who can help you understand policy details and make informed decisions.
Instant Policy Issuance
Receive your policy documents instantly upon completing the purchase, ensuring immediate coverage.
Customer-Centric Approach
RenewBuy prioritizes customer satisfaction by providing reliable support and addressing queries promptly.