Zero Depreciation Car Insurance, India
Zero depreciation car insurance protects your vehicle against all odds of collision damage, physical damages without considering depreciation into account, this impacts the complete coverage for damage caused. It is important to know what zero depreciation in car insurance and bike insurance is, as this add-on plays a crucial role at the time of claim settlement.
The rising repair costs for a car has made customer think twice before purchasing only comprehensive insurance. To escape the logic of payment for depreciation from one pocket customers have started opting for nil depreciation or Zero depreciation insurance or Bumper to bumper cover.
What is Zero Depreciation in Car Insurance?
Zero depreciation cover is also known as bumper to bumper or nil depreciation cover. With zero depreciation coverage, the insured does not have to pay the depreciation value of the damaged or replaced parts and the policyholder can claim the full amount. It applies to vehicles that are less than 5 years old and the policyholder can avail of it twice during the policy tenure.
The word depreciation is derived from the Latin word “Depretium”. In which “De” means decline and “pretium” means Price. So, zero depreciation car insurance means is the decline in the value or price of the fixed asset over a period of time due to wear and tear.
It is important to know what zero depreciation in car insurance and bike insurance is, as this add-on plays a crucial role at the time of claim settlement. As it is known that each and every part of a car undergoes wear and tear due to its usage over a period of time. This wear and tear results in the depreciation of the part which means that the value of the part is reduced with each passing day.
How does Zero Depreciation work?
Zero depreciation cover should opt while purchasing the motor insurance policy itself. It is not possible to incorporate the zero depreciation cover once the policy period starts. This is done to avoid any undue advantage to be taken by the insured in case of any claim.
Now let us understand the way Nil depreciation or Zero dep car insurance works in the normal scenario.
For example, let us assume that Mr.X has purchased Zero depreciation car insurance cover on 1-Jan-2020 for his vehicle registered on the same date. While driving his vehicle on a highway in the monsoon season he met with an accident due to the fog on 11-Sep-2020 and has registered for a claim.
After the survey, the claim amount arrived at Rs.1, 20, 000/- including all the repairs for the damaged parts. The depreciation amount arrived at Rs.30, 000/- which would not have been paid had the insured not opted for the Zero dep car insurance cover.
So now the insured will be paid the claim amount after deducting the Compulsory Deductible and salvage charges if any.
In the same example if we assume that the insured had not opted for car insurance zero depreciation cover, the depreciation amount of Rs.30, 000 had to be borne by the insured. In short, the zero depreciation car insurance policy cover safeguards the interest of the insured in increasing the claim amount payable and reducing the burden on the insured.
It is hereby advised to the insured that it is in the interest of the customer to select the Zero depreciation bike insurance and zero depreciation car insurance. In some companies, the zero depreciation car insurance after 5 years India is not available due to the fact that the depreciation percentage after 5 years is higher owing to the fact that the wear and tear of vehicles are higher after 5 years.
For the same reason in almost all the companies the zero depreciation bike insurance after 3 years is not available. So, it is advisable to purchase zero depreciation car insurance for 5 years and zero depreciation bike insurance for 3 years.
Calculate Zero Depreciation in Car Insurance
As explained in the previous article Depreciation is defined as the decline in the price or value of the product over a period of time. In-car insurance depreciation covers the depreciation is calculated on the basis of the age of the vehicle and the damaged part.
Insurance Regulatory and Development Authority of India (IRDA) has specified the depreciation rates which are to be considered while settling the claim.
- For all rubber, nylon, plastic parts, tires and tubes, batteries, and airbags - 50%
- For Fiberglass components - 30%
- For all parts made of GLASS - NIL
- The rate of depreciation for all other parts (apart from the above-mentioned) including Wooden parts will be as per the below table.
- Rate of Depreciation for Painting: In the case of painting, the painting charges calculated are different for different companies.
|Age of the vehicle
||Percentage of Depreciation
|Not exceeding 6 months
|Exceeding 6 months but not exceeding 1 year
|Exceeding 1 year but not exceeding 2 years
|Exceeding 2 years but not exceeding 3 years
|Exceeding 3 years but not exceeding 4 years
|Exceeding 4 years but not exceeding 5 years
|Exceeding 5 years but not exceeding 10years
|Exceeding 10 years
Zero Depreciation add-on covers help save more money for customers as without Nil depreciation customers have to shell out more money for the claim. The cost of depreciation of parts is to be borne by the insured if the Zero Depreciation cover is not opted for. But with a 0 Depth car insurance cover, the cost of depreciation will be reimbursed by the insurance company.
Higher Claim Amount
Opting for the Zero Debt car insurance helps the insured get a higher claim amount compared to that of the claim amount with comprehensive cover. The amount for depreciation can form a considerable portion of the overall claim amount.
Less Investment More Coverage
The premium paid for Car insurance Zero Depreciation Cover is quite less compared to the coverage it offers. The premium for Zero depreciation in car insurance would normally be a percentage of comprehensive premiums. So more coverage can be obtained by paying fewer premiums. Zero dep car insurance premium calculators are used to arrive at the premium.
Benefits of Zero Depreciation Car Insurance
Zero Depreciation add-on covers help save more money for customers as without nil depreciation customers have to shell out more money for the claim. The cost of depreciation of parts is to be borne by the insured if the Zero Depreciation cover is not opted for. But with a Zero Depreciation cover, the cost of depreciation will be reimbursed by the insurance company.
- Higher Claim Amount: Opting for the Zero Depreciation car insurance helps the insured get a higher claim amount compared to that of the claim amount with comprehensive cover. The amount for depreciation can form a considerable portion of the overall claim amount.
- Less Investment More Coverage: The premium paid for Car insurance Zero Depreciation Cover is quite less compared to the coverage it offers. The premium for Zero depreciation in car insurance would normally be a percentage of comprehensive premiums. So more coverage can be obtained by paying fewer premiums. Zero depreciation car insurance premium calculators are used to arrive at the premium.
Factors Affecting Zero Depreciation Car Insurance Premium
- Age of the Car: In motor insurance, the zero depreciation is directly related to the age of the vehicle, the same is in the case of Car insurance. Zero depreciation premium increases with an increase in the age of the car. Normally Zero depreciation is offered for vehicles aged up to 5 years while some companies are offering up to 7 years of car age.
- Make & Model of the Car: The Zero depreciation car insurance calculator depends on the Make as well as Model of the car. If the cost of replacement of a part is higher for a model then the premium also would be higher. Therefore the kind of car you have will decide the zero depreciation car insurance premiums.
- Area of Usage: The area of usage of cars also plays an important role in determining the Zero depreciation premium in car insurance. Every city has a different rate of risks associated with it and therefore different levels of higher premium for different risks.
Every plan has its coverages and exclusions; zero depreciation plans are no different.
- Regular wear and Tear of the vehicle.
- Damage caused by un-insured accessories.
- Damage caused by an uninsured peril
- Damages caused by mechanical breakdown
As it is known that each and every car part replaced in a car undergoes wear and tear due to its usage over a period of time. This wear and tear results in the depreciation of the part which means that the value of the part is reduced with each passing day.
Zero Depreciation Car Insurance vs Comprehensive Cover in Car Insurance
Comprehensive car insurance had its own limitations in the form of depreciation. Depreciation refers to the decrease in the value of the asset over a period of time due to usage. The depreciation is factored in the case of a comprehensive car insurance claim and only a partial claim amount is paid to the insured. The remaining amount has to be borne by the insured customer which is the depreciated amount for the damaged parts.
This had led to the need for the Bumper bumper cover or the Zero depreciation cover in car insurance at the time of claim. The Zero depreciation cover is the most preferred add-on or rider in the car insurance plan as it covers almost the entire claim amount incurred by the insured due to an accident. Let us understand the difference between the Zero depreciation cover and the Comprehensive cover in car insurance:
||Zero Depreciation cover
||Includes Own damage and Third party premium. Third party premium is decided by the IRDA and own damage premium is decided by the insurance companies within the set limit
||Slightly higher than the Comprehensive cover premium and includes the add-on premium paid for the Zero depreciation cover as well as the Own damage and Third party premium. Normally the zero depreciation cover premium would be a percentage of the Insured Declared Value of the car.
||Covers claim costs after factoring depreciation costs i.e. depreciation amount is not taken into consideration at the time of claim settlement
||Covers the entire claim cost including the depreciation costs. The cost of depreciation is not deducted from the final claim bill.
||Comprehensive cover can be offered up to 15 years age of vehicle or more than that depending on the mutual agreement between the insurance company and the insured customer
||Zero depreciation cover is generally offered only up to 5 years of age by most companies. Some companies offer the zero depreciation cover as an add-on up to 7 years of vehicle age depending on several factors such as the Make model of the vehicle, cubic capacity of the vehicle, a previous year loss ratio of the vehicle, etc.
||Up to 50% depreciation is applicable on parts such as Wood, Fibre, Steel, etc., at the time of claim settlement.
||No depreciation is applicable on any part at the time of claim settlement and the claim is paid accordingly.
|How many times Can you claim?
||Under the comprehensive cover, any number of claims can be made and all the claims are settled after factoring depreciation.
||Some companies offer the claim settlement with Zero depreciation cover only up to 2 claims after which the claims would be settled on the comprehensive cover basis, while some companies have no limit on the number of claims that can be made under the Zero depreciation cover.
||Cashless claim settlement can be availed from the list of network garages available in your area of operation. Reimbursement claims are also allowed under the comprehensive car insurance policy subject to complete documents being submitted to the insurance company.
||Cashless claims with depreciation cover can be availed only in the tie-up garages. In case of a reimbursement claim outside the list of tie-garages, the claim would not be settled under the depreciation cover.
Zero depreciation covers the cost of depreciation of the damaged part at the time of claim. Without zero depreciation cover, the cost of the depreciation associated with the part would have to be borne by the insured customer.
The bumper-to-bumper car insurance covers the loss or damage to the parts of the car at the time of claim without factoring in depreciation. The major difference between the Zero depreciation cover and Comprehensive cover is the claim settlement by taking depreciation amount into consideration.
For best car insurance renewal quotes with Zero depreciation cover and comprehensive cover please visit Our Portal and get assistance from a great team of agents to serve your car insurance needs.
Difference between the Zero Depreciation and Third Party in Car Insurance
Having valid third-party car insurance is mandatory as per the Indian Motor Vehicle’s Act without which the owner/driver can be fined up to Rs.5000 or up to 3 months imprisonment or both. This has led to the demand for third-party insurance in the market, but third-party car insurance is limited to cover the damages sustained by third parties and not the insured’s own vehicle.
So the customers have started looking for insurance that can cover both the vehicle as well as the third-party damages which ultimately led to the purchase of Comprehensive car insurance.
|What is it?
||Zero depth car insurance is an add-on cover under the own damage section of the car insurance policy. It is also known as Bumper to bumper car insurance or Nil depreciation car insurance policies.
||Third-party car insurance is the basic and compulsory form of car insurance under the Motor vehicles act. For any car to ply on public roads, it is compulsory to have a third-party car insurance policy.
||Any damage to the car due to accidental means and with the operation of the insured peril is covered under the Zero depreciation cover.
||Third-party car insurance covers the Death, Disability, and Property damage claims of the third parties involved in the accidents.
|Age of the Car
||A car aged up to 5 years is eligible to avail of the zero depreciation add-on or the bumper-to-bumper car insurance cover. In some rare cases, the add-on is available up to 7 years of age.
||The third-party car insurance is provided as long as the vehicle is having a valid fitness certificate and the valid RC copy provided by the RTO.
||The premium for Zero depreciation is a certain percentage of the Insured Declared Value. The premium is charged under the own damage section of the car insurance policy.
||The premium under the third-party section is decided by the IRDA and is common across insurance companies. The third-party premium is subject to change each year.
||The discount offered under the own damage section is applicable to the zero depreciation cover or the bumper to the bumper cover and differs from company to company.
||No discount can be offered under the Third-party section as the premium is decided by the IRDA. There are 3 slabs of third-party premium for car insurance.
|No claim bonus
||No claim bonus discount is calculated on the Own Damage section of the car insurance and is applicable to the zero depreciation add-on.
||There is No claim bonus under the third party section of the car insurance.
||Zero depreciation or bumper-to-bumper cover or Nil depreciation is an add-on in the own damage section of the car insurance.
||No add-ons are available under the third-party section of car insurance.
||In case of accident claims, the claim amount is settled without factoring in the depreciation.
||All the accidental claims leading to death or disability are settled in the honorable courts while the property damage claims are settled under the MACT tribunals.
||In case of a theft claim, the IDV mentioned in the car insurance policy copy is settled by the insurance company.
||No claim amount is paid for theft claims under the third-party section of car insurance.
|Act of God damage
||Act of god damage claims such as Floods, Toronto’s, and Earthquakes, etc. Are settled up to the IDV amount mentioned in the policy copy.
||Act of god damage claims is NOT settled under the third-party section of the car insurance policy.
How to Check Zero Depreciation Car Insurance Online?
Buying a zero debt insurance policy online is a simple process as compared to purchasing it online.
- Submit the insured cars make and model in the online claim form
- Select the zero-depreciation insurance option
- Get the zero dep car insurance quotes and premium estimate as per the details provided
- Enter your name, geographical location, contact number, address, etc.
- Make the payment online and car insurance purchase is completed
- The policy can be downloaded as well emailed on the registered id.
How to Renew Zero Depreciation Car Insurance Online?
- It is recommended for the policyholder to keep a record of the same so that the policy is renewed before the due date.
- While renewing zero depreciation car insurance online, one just needs to choose the existing or new customer option, to begin with, the process.
- Submit all the required details, fill the form and click on the payment option
- Payment to the insurance company can be done online using a debit or credit card.
- The insurer will send an acknowledgment of the zero depreciation car insurance renewal on your registered email id and phone number.
How to Claim Zero Depreciation Car Insurance Policy?
- At the time of claim settlement, the depreciation on your car parts which mentioned in the policy wordings. As mentioned above you need to pay 50% depreciation on nylon, plastic, rubber parts including batteries, 30% on fiberglass components, and 5-10% on wooden parts and so on.
- In the case of basic car insurance plans, the insurer only reimburses the loss after deduction of the depreciation value of the replaced parts, unlike a nil depreciation car insurance policy.
- Now that you are aware of the benefits of zero depth car insurance, you can buy it as an add-on, why not go ahead and buy it.
Visit PolicyBachat and get the best Bumper to bumper car insurance or Zero depreciation quotes for your car or bike from the top insurance companies and get up to 80% discount from the insurance companies. You can also check the company’s policy wordings and sales brochure for more information.
FAQs of Zero Depreciation Insurance policy
Is it really necessary to have a Zero depreciation Car Insurance Add-on?
Buying a car is a dream for many of us. While purchasing a car we put a lot of effort into deciding the make, model, and many other things. The Car insurance is normally taken from the showroom for the brand new vehicle and subsequent renewals are normally done from outside. It is equally important to be attentive in deciding the insurance for your car as you don’t want to have heartbreak at the time of claim.
There are many add-ons available in motor insurance such as nil dep insurance, 24*7 roadside assistance, engine protection, etc. Among these covers the most opted cover is zero dep cover as the point of taking insurance is fulfilled if only the depreciation cover opts.
Having an insurance policy without Zero dep is like having an insurance policy with Co-pay. At the time of claim, you need to bear the expenses calculated on the depreciation.
Many of us might have faced the dilemma while purchasing the car insurance policy whether to include the Zero dep cover. If you are taking car insurance online without opting for zero depreciation then be ready to shell out some amount of money at the time of claim as the cost for depreciation is not covered under the comprehensive policy.
Let us understand the need for zero dep cover with an example:
For instance, Ms. Monni's car was due for renewal, and has decided to go for only comprehensive insurance as there was no claim in the previous year and she felt that the amount of premium she paid was too high. So, she went online to search for online zero depreciation car insurance where she entered her car details and car insurance quotes are displayed. She made use of an online car insurance calculator to calculate the premium and finally selected the best one and paid online to receive the policy copy.
After a month she has met with an accident and the rear side of her car was damaged. She then took the vehicle to a nearby garage and the claim estimate was given as Rs.50000. The depreciation cost for the replacement of parts was Rs.25000 in the total bill. The insurer has deployed and the final claim amount was approved to be Rs.25000 by the insurance company.
Ms.Monni was shocked to see that she had to pay nearly half of the claim amount from her pocket which was really disappointing to her. Had she opted for the Zero dep add-on the entire claim amount would have been settled by the insurance company.
She had saved Rs.6000 by not opting for a Zero dep add-on but ended up paying four times that saved amount at the time of claim. This difference should be enough to understand the importance of zero dep cover in car insurance.
Who should take ZERO DEP Cover?
Zero dep cover should be taken:
- If your car is brand new then it is advisable to opt for a zero dep add-on. The cost of repair or replacement of high-end cars such as Audi, Benz, and BMW is quite high and even has a high depreciation rate too.
- Sometimes experienced drivers are also responsible for the accidents for no fault of theirs. It might be because of some drunk driver hitting your car or an inexperienced driver hitting your car.
For the best online car insurance quotes please visit PolicyBachat where you can check for the best car insurance renewal quotes and compare car insurance quotes.
Is zero depreciation insurance limited to new cars?
We cannot get zero depreciation car insurance after 5 years, some insurers give zero depreciation beyond 5 years, and this solely depends on the company. Zero depreciation car insurance after 3 years is possible and can buy zero depreciation car insurance policy.
What are the benefits of zero depreciation insurance policies?
- There are no out-of-pocket expenses in case of any damages to the vehicle; full claim settlement is made under zero depreciation.
- The insurer bears the cost of repairs, plastic, and fiber.
- All your claims respecting your insured parts are claimed without taking depreciation into reflection. This imparts the vehicle value without any investment.
Difference between zero depreciation and bumper-to-bumper policy?
Zero depreciation is also known as a bumper-to-bumper insurance policy. Both the terms denote the same concept of procuring 100% claim settlement of your damaged parts.
Do zero depreciation is profitable?
- If you are aware of car insurance coverage and require optimum coverage to your vehicle then zero depreciation insurance online is profitable. Below cases makes your policy worth to opt
- For those who purchased a new vehicle, it is advisable to opt for a zero depreciation premium.
- High-end vehicles with expensive spare parts, these vehicle owners should opt for a bumper-to-bumper policy to get rid of huge damage risks.
- Insurance is mandatory if your residence is prone to theft or riots.
- If you are confident of making dents or bumps to your vehicle, it is suggested to get a zero depreciation policy.
- For drivers who have a worse driving history, this add-on is helpful.
The below practical example defines the importance of a zero depreciation insurance policy. Let us assume you met with an accident and the bumper is total loss damaged, calculate the out-of-pocket expenses to get repairs done.
||With Zero Dep Car insurance
||Without Zero Dep Car insurance
|Out of pocket expenses
Is zero depreciation insurance coverage limited to a number of claims?
The answer is yes, most of the insurance company’s limit the number of claims per annum is 2. The reason is, your car is depreciated once a year and this limitation also ensures car owners safe driving.
If your vehicle is eligible for zero depreciation, which policy do you prefer comprehensive or zero depreciation? Receive full claim without any deduction for your damaged parts, enjoy the perils of zero depreciation policy, and avoid speculative damage claims.