What Is Zero Depreciation Car Cover and How It Works

What Is Zero Depreciation Car Cover and How It Works

Car insurance is important for every vehicle owner. But not everyone understands the difference between a basic policy and an add-on like zero depreciation car cover. If you are planning to buy a new car or renew your existing policy, knowing about this cover can help you save a lot during claims. In this blog, we’ll explain what zero depreciation car cover means, how it works, and whether it’s right for you.

What Is Zero Depreciation Car Cover?

Zero depreciation car cover, also known as nil depreciation cover, is an add-on available with comprehensive car insurance. Normally, when you make a claim, the insurance company deducts the depreciation value of your car parts before settling the amount. But with zero depreciation cover, you get the full claim amount without any deduction for depreciation.

This means you pay less from your own pocket during repairs or part replacement. It is especially useful when your car is new or less than five years old.

How Does Depreciation Work in Car Insurance?

Every vehicle part loses value over time. This decrease in value is called depreciation. For example:

• Plastic parts may lose 30-50% of their value.

• Metal parts lose around 10-40%.

• Paint and rubber parts also depreciate quickly.

So, if your car is damaged and needs part replacement, your insurer deducts the depreciation amount from the total cost. You have to pay the remaining balance. This is where zero depreciation car cover helps you avoid that loss.

How Zero Depreciation Cover Works in Real Life

Let’s say your car meets with an accident, and the repair cost is ₹50,000. Without zero depreciation cover, the insurer may pay only ₹40,000 after deducting depreciation. You’ll have to pay ₹10,000.

But if you have zero depreciation cover, the insurance company pays the full ₹50,000. You save money and get peace of mind.

Who Should Buy Zero Depreciation Car Cover?

This cover is not mandatory, but it is very helpful. It is best suited for:

• New car owners

• People with luxury or high-end vehicles

• First-time car buyers

• Car owners in accident-prone areas

• People who want higher protection with minimum out-of-pocket costs

If you fall into any of these categories, you should strongly consider adding this cover to your policy.

Top Benefits of Zero Depreciation Car Cover

Here are some of the main advantages

1. Higher Claim Settlement

You receive a higher amount during claims since depreciation is not deducted.

2. Lower Out-of-Pocket Expenses

Saves you money on part replacement and repairs.

3. Better Protection for New Cars

New cars lose value fast. This cover protects your investment.

4. Peace of Mind

You don’t have to worry about the age of car parts or depreciation during claims.

How to Add Zero Depreciation to Your Policy

Adding this cover is very simple. You can do it:

• While buying a new comprehensive insurance policy

• When renewing your existing policy

• Through your insurance agent or online

You just have to select “zero depreciation add-on” while filling the proposal form. It will slightly increase your premium, but the benefits far outweigh the cost.

When to Buy Zero Depreciation Cover?

The best time to buy this add-on is:

• When purchasing a new car insurance policy

• When renewing insurance for a car less than 5 years old

• After changing your insurer or upgrading your plan

Many insurers offer it only for cars up to a certain age (usually 5 to 7 years), so it’s best to buy it early.

Where Can You Get Zero Depreciation Car Cover?

Almost all leading insurance companies in India offer this add-on. You can get it from:

• Public and private insurers

• Online insurance portals

• Licensed insurance agents

• Through insurance aggregators or apps

Compare different insurers to check who offers the best deal with this add-on.

What Is Not Covered Under Zero Depreciation?

While zero depreciation cover is useful, it doesn’t cover everything. Common exclusions include:

• Engine damage due to oil leakage or water entry

• Wear and tear not related to accidents

• Mechanical or electrical breakdown

• Driving under the influence or without a license

• Damages not reported within the required time

Always read the policy document carefully.

Frequently Asked Questions

Q: Is zero depreciation cover available for all cars?

A: No, it is usually available for cars up to 5-7 years old, depending on the insurer.

Q: How many times can I claim under zero depreciation?

A: Most insurers allow 2 claims per year, but some may allow more. Check with your provider.

Q: Does it increase the premium?

A: Yes, slightly. But the extra premium is worth the savings during claims.

Q: Can I add zero depreciation to third-party insurance?

A: No. It is only available with comprehensive car insurance.

Conclusion

Zero depreciation car cover is a smart add-on that gives complete protection to your vehicle, especially when it is new. It ensures that you get the full claim amount without deductions due to depreciation. If you are looking to become an insurance agent or sell car insurance policies, understanding this cover can also help you explain it better to your customers.

For car owners, investing a little extra in this cover can save a big amount during unexpected repairs. So next time you buy or renew your car insurance, don’t forget to check for the zero depreciation add-on.