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Difference between the Zero Depreciation and Third Party in Car Insurance

The zero depreciation or bumper to bumper or nil depreciation in car insurance is an add-on where the claim settlement is done without factoring the depreciation amount. The zero depreciation is an add-on which can be taken by paying additional premium under the own damage section of the car insurance. The third party section in the car insurance is compulsory as per the Indian Motor vehicles act for every car plying on public roads. Let us understand the difference between the Zero depreciation car insurance policies and the Third party car insurance policy: -

Details Zero Depreciation Third Party
What is it? Zero depreciation 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. The third party car insurance is the basic and compulsory from 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 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 the 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 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 the 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 the depreciation. All the accidental claims leading to death or disability are settled in the honourable courts while the property damage claims are settled under the MACT tribunals.
Theft Claim In case of 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, Earthquakes etc. Are settled up to the IDV amount mentioned in the policy copy. Act of god damage claims are NOT settled under the third party section of car insurance policy.

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