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Zero Depreciation Car Insurance, India

Zero depreciation car insurance protect 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 ones pocket customers have started opting for nil depreciation or Zero depreciation insurance or Bumper to bumper cover.

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 cover 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, tyres and tubes, batteries and air bags - 50%
  • For Fibre glass components - 30%
  • For all parts made of GLASS - NIL
  • Rate of Depreciation for all other parts (apart from the above mentioned) including Wooden parts will be as per below table.
  • Rate of Depreciation for Painting: In case of painting, the painting charges calculated are different for different companies.
Age of the vehicle Percentage of Depreciation
Not exceeding 6 months NIL
Exceeding 6 months but not exceeding 1 year 5 %
Exceeding 1 year but not exceeding 2 years 10%
Exceeding 2 years but not exceeding 3 years 15%
Exceeding 3 years but not exceeding 4 years 25%
Exceeding 4 years but not exceeding 5 years 35%
Exceeding 5 years but not exceeding 10years 40%
Exceeding 10 years 50%

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 higher claim amount compared to that of claim amount with comprehensive cover. The amount for depreciation can form a considerable portion in 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

  1. Age of the Car:In motor insurance the zero depreciation is directly related to the age of the vehicle, same is in case of Car insurance. Zero depreciation premium increases with increase in the age of the car. Normally Zero depreciation is offered for vehicle age up to 5 years while some companies are offering up to 7 years of car age.
  2. Make & Model of the Car:The Zero depreciation car insurance premium 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.
  3. Area of Usage:The area of usage of car also plays an important role in determining the Zero depreciation premium in car insurance. Every city has the different rate of risks associated with it and therefore different level of higher premium for different risks.


Every plan has its coverages and exclusions; zero depreciation plans is no different.

  • Regular wear and Tear of the vehicle.
  • Damage caused by un-insured accessories.
  • Damage caused by uninsured peril
  • Damages caused by mechanical breakdown

As it is known that each and every car parts 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 by each passing day.

Zero Depreciation for Two Wheeler Insurance

Buying a two-wheeler is of high expense. If you are the owner of a bike you might have gone through the stages of tracking your finances while managing your savings to buy a two-wheeler. You might already have noted the impact of lifestyle on your vehicle.

You can’t prevent your car from regular aging or any unforeseen damage caused while commuting. These damages or aging of the vehicle have a significant amount of impact on your pocket. These situations make appropriate insurance with higher coverages important for your two-wheeler.

Buy a Zero Depreciation plan in Two Wheeler Insurance

Zero depreciation is given on the vehicles which are new and the plan does not cover the two-wheelers which are more than 3 years old. The plan can deliver an optimized benefit if it is taken on any brand new bike.

It is advised to choose Zero Depreciation plan while you are buying a new insurance for your vehicle. If you are interested in buying Zero Depreciation plan, you can choose it while renewing your standard policy. The insurance companies hold a limitation on the number of claims opted during the policy period without depreciation which is generally 2 claims.

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 case of comprehensive car insurance claim and only 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 to 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:


Comprehensive Cover Zero Depreciation cover
Premium 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.
Claim amount 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.
Age limit 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 of the 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 Make model of the vehicle, cubic capacity of the vehicle, previous year loss ratio of the vehicle etc.
Parts Covered 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 comprehensive cover basis, while some companies have no limit on the number of claims that can be made under the Zero depreciation cover.
Cashless/Reimbursement 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 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 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 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 Portaland 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.

Details Zero Depreciation Third-Party
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.
Coverage 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.
Premium 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.
Discount 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.
Add-ons 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.
Accident Claim 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.
Theft Claim 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.

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 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 the 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 zero depreciation policy.
  • For drivers who have a worse driving history, this add-on is helpful.

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.

Premium With Zero Dep Car insurance Without Zero Dep Car insurance
Deductible 1500 1500
Repair Cost 24000 24000
Out of pocket expenses 1500 13500
Savings 22500 10500

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.

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.

So, it is advisable to purchase zero depreciation car insurance for 5 years and zero depreciation bike insurance for 3 years. For Zero Depreciation Car Insurance calculator can be done using the portal where almost all the car insurance companies are offering their services.

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