Zero Depreciation Car Insurance
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Home / Car Insurance / Zero Depreciation Car Insurance - Nil Depreciation: Benefits
What is Zero Depreciation in Car Insurance?
What is zero depreciation in car insurance? Zero Depreciation in car insurance is an add-on that eliminates depreciation costs during claims, ensuring full coverage for own damages. In other words, with a zero dep insurance add-on, the insurance provider will not consider the depreciation costs during claim settlements.
Should You Opt for Zero Dep Insurance Cover?
If you have recently purchased a car or own a luxury car, buying a Zero Depreciation cover makes a lot of sense. It will reduce your out-of-pocket expenses in case of damages to your car. Following are some of the reasons to opt for a Zero Dep cover for your car insurance.
If you are living in a high-risk area.
Buy the Zero Depreciation Cover if you have recently learned how to drive a car.
If you own a luxury or expensive car with costly car parts.
Opt for a Zero Dep cover if you need to repair minor damages to keep the car in a top-notch condition.
If you are worried about small dents and bumps or expensive spare parts.
If you don’t have a dedicated parking space, the chances of damage increase. The Zero Dep Insurance will help you cover repair costs for such damages.
If you are someone who wishes to reduce out-of-pocket expenses in case of car damage.
Benefits of Zero Depreciation Car Insurance Add-On
Here are the key advantages of buying a Zero Dep car insurance.
Increases the Claim Settlement Amount
Buying the Zero/Nil Depreciation Add-on Cover bridges the gap between the claim settlement amount and the actual damages to your car. For example, if the repair cost is Rs. 30,000, then the insurance company will settle your claim for Rs. 15,000 after deducting depreciation value. However, if you have opted for the Zero Depreciation Add-on, the insurer will settle the claim amount of Rs. 30,000, thereby increasing the claim settlement amount.
Protects from Financial Loss
Zero Dep car insurance helps in increasing the claim settlement amount. Hence, you are certainly controlling the outflow of your hard-earned money. Without the Zero Dep Add-on, you end up paying the unpaid portion of the claim, which is deducted as depreciation. And, if the damage to your car is considerable, the repair bill will certainly be higher and burn a hole in your pocket.
The Add-on Comes at an Affordable Cost
While the Zero Depreciation Car Insurance Add-on Cover is offered with an additional premium, the cost is low and affordable. You can compare the Nil Depreciation premium online and then choose the plan with the lowest premium. Additionally, by including the Zero Depreciation Add-on to the Comprehensive Car Insurance, your car and your money are well-protected at an affordable cost.
How is Zero Depreciation Car Insurance Premium Calculated
Various factors come into play when calculating Zero Depreciation car insurance premiums. Following are some of the critical factors that impact the premium of the Zero Dep add-on.
Geographical Location
Every city has its different challenges, problems and risks. Hence, the premium of this add-on cover depends on the location where you will be driving your car.
Age of Your Car
Zero depreciation add-on premium is dependent on the age of your car, and hence car's age plays a pivotal role.
Make/Model of Your Car
The make and model of your car will have an impact on the cost of the parts. Hence, the model of your car determines the premium for this add-on cover.
Depreciation Rates in Car Insurance
The depreciation rate in cars varies depending on the type of vehicle component and the car’s age. To make things easier for insurers and policyholders, IRDAI (Insurance Regulatory and Development Authority of India) has set the depreciation rate for cars. The following sections provide more details on the same.
Rate of Depreciation for All Parts Approved by IRDAI
CAR PARTS | RATE OF DEPRECIATION |
|---|---|
Rubber/Plastic/Nylon/Batteries | 50% |
Fibre Parts | 30% |
Wooden Parts | 5% in the first year, 10% in the second year, and so on. |
Rate of Depreciation in Vehicles
AGE OF CAR | RATE OF DEPRECIATION |
|---|---|
Less Than 6 Months | 5% |
More Than 6 Months to 1 Year | 15% |
More Than 1 Year to 2 Years | 20% |
More Than 2 Years to 3 Years | 30% |
More Than 3 Years to 4 Years | 40% |
More Than 4 Years to 5 Years | 50% |
More Than 5 Years | To be mutually decided between the insurer and policyholder |
Rate of Depreciation in Vehicles: Metallic Parts
AGE OF CAR | RATE OF DEPRECIATION |
|---|---|
Less Than 6 Months | Nil |
More Than 6 Months to 1 Year | 5% |
More Than 1 Year to 2 Years | 10% |
More Than 2 Years to 3 Years | 15% |
More Than 3 Years to 4 Years | 25% |
More Than 4 Years to 5 Years | 35% |
Exceeding 5 years but not exceeding 10 years | 40% |
More Than 10 Years | 50% |
Zero Depreciation Car Insurance vs Comprehensive Coverage
The main difference between Zero Depreciation car insurance and Comprehensive coverage is that Zero Depreciation is an add-on, and Comprehensive coverage is a car insurance policy.
The following table highlights the key differences between Zero Depreciation Cover vs Comprehensive coverage.
PARAMETER | ZERO DEPRECIATION CAR INSURANCE | COMPREHENSIVE CAR INSURANCE |
|---|---|---|
Meaning | An optional add-on while buying Comprehensive Car Insurance. It will ensure the insurance company does not deduct depreciation of car parts before settling the claim for the damages to your car. | A bundle of Third-party Liability Plan and Own Damage Plan. Several add-ons can be included to make it exclusive; however, it considers the depreciation of car parts before settling the claim. |
Premium | There is a slight increase in car insurance premium, but it ensures there is no depreciation of car parts during claim settlements. | The premium for the standalone Comprehensive Policy is lower than a policy that has add-ons such as Nil or Zero Depreciation. |
Age of Car | The add-on can be purchased for cars that are less than 5 years old. | The Standalone Comprehensive Car Insurance can be purchased for cars that are less than 15 years old. |
Depreciation Factor | Depreciation of car parts is not considered while settling claims except for compulsory deductibles. | Insurers consider the depreciation of car parts while settling claims. |
Savings | While the premium you pay might be slightly higher, the cost of paying for the depreciation of car parts is nullified. | While the premium is lower than that of Zero Dep Car Insurance, you get to save only on the premium you pay. |
How to Buy Zero Depreciation Car Insurance
You can buy the add-on cover online while purchasing or renewing the car insurance. Buying a Zero Depreciation Car Insurance Policy is a lot easier, thanks to digital insurance providers such as ACKO. Here are the steps to buy Zero Dep cover from ACKO.
Step 1: Go to the top of this page or download the ACKO app.
Step 2: Enter your car registration number, verify the vehicle details and click on “View Plans”.
Step 3: Select Comprehensive Policy with Zero Dep cover and purchase the plan by paying the premium online.
Note: You cannot opt for Zero Depreciation Cover while buying Third Party Car Insurance.
How to Renew Zero Depreciation Car Insurance
The process of renewing Zero Dep cover is similar to renewing a car insurance policy. You can refer to the following steps to renew the Nil Depreciation cover from ACKO.
Step 1: Enter the vehicle registration number by going to the top of this page or downloading the ACKO app.
Step 2: Select the Comprehensive Plan with Zero Depreciation cover from the available plans.
Step 3: Pay the premium online to instantly renew the Zero Dep cover.
Claim Settlement with Zero-Depreciation Car Insurance
During claim settlement, the insurer will deduct the depreciation applicable on car parts. The rate of depreciation will be mentioned in the policy wording. However, when you claim against Zero Dep car insurance, you will receive the full claim amount without any deduction due to depreciation. Hence, you need not pay out of your pocket for car repairs. The claim process also becomes simple with Zero Depreciation cover as you need not worry about deductions due to the depreciation rate.
Advantages of Buying Nil Depreciation Add-On Cover with ACKO
Here are the key benefits of buying Zero Depreciation cover online from ACKO.
Exclusive Plans
When you buy on ACKO, you can buy this add-on cover along with a Comprehensive policy. Or you can also buy a Standard Comprehensive plan bundled with Zero Depreciation benefits that are exclusively available on ACKO.
Low Premium
When you buy on ACKO, you directly deal with us. Since there are no middlemen involved, it results in low operating costs. We pass on the benefits to you in the form of low-cost insurance plans.
Value-Added Services
When you buy on ACKO, you not only enjoy the benefits of the Comprehensive Insurance & Zero Depreciation add-on cover. You can also avail of premium services like free pick-up and doorstep delivery in select cities.
What is Not Covered in a Zero Depreciation Add-on Cover?
A Zero Dep insurance covers most expenses arising out of damage to your car. However, there are a few exclusions, which are listed below.
Not Valid for Cars Aged More Than 5 Years Old
Zero Depreciation add-on does not cover cars that are more than 5 years old. Please read the terms and conditions, as some insurers do not offer cover for cars over a certain age.
Total Loss/Constructive Total Loss of the Car
In case of an unfortunate accident that renders the car a total loss, a Zero Depreciation add-on will not be considered while settling the claim. The current market value of the car is considered while settling claims towards a car that has undergone a total loss.
Replacement of Certain Car Parts
Replacement of tyres and tubes, unless specified in the terms and conditions of the policy, is not covered under the Zero Depreciation cover.
Driving Without a Driving Licence
If you are driving the car without a valid Driving Licence and you meet with an unfortunate accident, then the insurance company will not honour the claim. In this case, even the Zero Dep insurance add-on will not be considered.
Driving Under the Influence of Alcohol/Intoxicating Substances
Your claim towards the repair bill for the damages to your car will be dishonoured if the driver is found driving under the influence of alcohol or an intoxicating substance.
Doesn’t Cover Consumables Cost
This car insurance add-on cover does not compensate for the costs of consumables such as nuts and bolts, screws, gearbox oil, brake oil, lubricants, etc.
Doesn’t Cover Mechanical/Engine Breakdown
Regular wear and tear, mechanical breakdown or engine breakdown are not covered under the Nil Depreciation add-on cover.
Doesn’t Cover Compulsory Deductibles
While settling claims, the Zero Depreciation add-on covers only the cost of the car part’s depreciation and does not cover compulsory deductibles.
Frequently Asked Questions on Zero Dep Insurance
FAQs related to Zero Dep Insurance
Frequently Asked Questions-FAQs
Should I buy zero depreciation car insurance?
Purchasing a Zero Dep car insurance purely depends on your requirements and the type of car you own. For instance, if you own a luxury car or have bought a new car, buying a Nil Depreciation cover makes sense.
Is it good to take zero depreciation car insurance after 5 years?
Zero Dep add-on cover is only available for cars less than 5 years old. So, you cannot purchase the add-on if you own a car which is more than 5 years old.
Who is eligible for zero DEP insurance?
If your car is less than 5 years old, you are eligible to buy the Zero Depreciation add-on along with the Comprehensive Car Insurance Policy.
Is zero depreciation the same as bumper-to-bumper?
Yes, zero depreciation is the same as bumper-to-bumper. They are just different names given to the same add-on cover.
Does zero DEP cover tyres?
No, the Zero Depreciation add-on does not cover car tyres since they are subject to wear and tear.
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