With time, every vehicle experiences natural wear and tear. When the parts of the vehicle depreciate, the devaluation affects the amount you get for repairs when making a claim. Car owners often Car owners often think that standard insurance pricing terms will fully cover parts replacement. That is not the case.
This is where Zero Depreciation Cover in car insurance becomes important.
Also known as Zero Depreciation Insurance, this add-on ensures that you receive the full claim amount without any deduction for depreciation on replaced parts. It can offer greater financial protection, especially during repairs.
In this article, we’ll discuss why you should choose Zero Depreciation Insurance during car insurance renewal, how it works, and when it’s the right choice for your vehicle.
What is Zero Depreciation Car Insurance?
Zero Depreciation Insurance, also known as Nil Depreciation or Bumper-to-Bumper Cover, is an add-on that can be purchased along with your car insurance policy. It ensures that you get full claim benefits on replaced parts without any deduction for depreciation.
In a standard car insurance policy, the insurer deducts depreciation on parts before settling the claim amount. This means you pay out of pocket for wear and tear. But, with zero depreciation car insurance, insurers like TATA AIG General Insurance Company Limited cover the full cost of repairs or part replacement, without subtracting depreciation.
For example, if your car’s plastic bumper is damaged, a standard policy might pay up to 50% of its replacement cost. But with a zero depreciation add-on, you get reimbursed for the full amount, leaving you stress-free.
Why Do You Need It During Renewal?
Most policyholders overlook the fact that as the vehicle gets older, the percentage of depreciation increases. If you didn’t opt for this cover while purchasing the policy, car insurance renewal is the perfect time to include it.
Here’s why:
1. Preserves the Value of Your Coverage
As your car ages, its components lose value. Even a comprehensive policy won’t cover full repair costs without the zero depreciation car insurance add-on. During renewal, this cover ensures your insurance payout still matches the original cost of damaged parts.
2. Avoids Out-of-Pocket Expenses
Without a zero depreciation policy, you might pay up to 50% of repair costs, depending on part type and car age. That’s a significant burden, especially if you’re driving a high-end vehicle. With this add-on, you avoid that financial hit.
3. Smart Move for Cars Under 5 Years Old
Most insurers offer this cover only if your car is up to 10 years old. If your vehicle falls within this range, renewing your car insurance without this cover might lead to higher expenses in future claims.
How Does Depreciation Impact Your Car Insurance Claim?
Part | Depreciation in Standard Policy | Coverage with Zero Depreciation |
Rubber, Nylon, Plastic Parts, tyres, tubes and batteries | 50% | 100% |
Fibreglass Components | 30% | 100% |
Wooden Parts (1–2 years old) | 10% | 100% |
Glass Parts | Nil | 100% |
painting | 50% | 100% |
When dealing with a standard policy, the deductibles mentioned above take away from your claim payment. With zero depreciation car insurance, the insurer will reimburse you in full for the repair, without applying the above deductibles.
Who Should Opt for Zero Depreciation Insurance?
What’s Not Covered Under Zero Depreciation Car Insurance?
While zero depreciation cover is highly useful, it doesn’t cover everything. Here’s what is usually excluded:
Example: Standard vs Zero Depreciation Cover
Let’s say your car gets damaged and the estimated cost of repair is Rs. 40,000. Here’s how your claim might play out:
Without Zero Depreciation Add-on:
With Zero Depreciation Add-on:
Even if you are paying a slightly higher premium for the add-on, you save more during repairs.
Things to Consider Before Opting for Zero Depreciation Cover
How to Add Zero Depreciation While Renewing Your Policy Online?
Renewing your car insurance online and adding a zero depreciation cover is simple:
When you renew your car insurance, you are not simply fulfilling a formality. It is a chance to enhance your coverage. By choosing a zero depreciation car insurance add-on, you are not only saving money, but also purchasing long-term peace.
It is a wise choice for anyone who wants to stay ahead in terms of unforeseen expenses, particularly when it’s time for claim settlement. If you are a beginner in driving or an owner of high value luxury car, this add-on cover will offer the best return on your investment.
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