Why should you opt for zero depreciation Car insurance?

Why should you opt for zero depreciation Car insurance?

by Nutan Gupta Last Updated: 2022-09-28T19:31:35+05:30

A zero depreciation cover provides for the complete coverage of the vehicle without any deductions.

Rahul Jha, who works as a general manager in a Mumbai-based firm got furious with the insurance company when he had to shell out Rs. 18,000 from his pocket towards his car repair.

  Without Zero Depreciation Cover With Zero Depreciation Cover
Total Expense towards car repair 60000 60000
Assumed rate of depreciation 30% 30%
Amount beared by insurance company {60,000-(60,000*30%*)} 42000 60000
Expense from own pocket 18000 (60000*30%) NIL

Rahul incurred a total expense of Rs. 60,000 towards repairing his car, however the insurance company reimbursed him only Rs. 42,000 after deducting a depreciation of 30%. Had Rahul opted for a zero depreciation policy, he would have easily saved Rs. 18,000.

Who should buy a Zero Depreciation Car Insurance?

- People with luxury cars
- People living in accident prone areas
- If you worry about small bumps and dents
- If you have a car with expensive spare parts

What role does zero depreciation play when you make a claim?

When you make a claim with a basic car insurance policy, the insurance company does not factor in the actual cost and reimburses just the depreciated value of the car parts replaced. A zero depreciation car insurance extends to the repairing costs of fibre, glass, rubber parts and plastic. The premium for a zero depreciation car insurance is slightly higher than the premium of a normal car insurance, but the insured is entitled to a 100% re-imbursement in case he makes a claim.

A zero depreciation car insurance rider can be bought if you have purchased a new vehicle, or for a vehicle not older than three years. So, if your car is more than three years old, you will have to buy a normal car insurance.

In order to ensure that people do not make meaningless claims, a zero depreciation car insurance comes with a restriction on the number of claims that you can make annually. This varies from one insurance company to other.

A zero depreciation car Insurance does not cover few conditions:

  • Wear and tear

  • Damage to uninsured items like accessories and bi-fuel/gas kit, tyres

  • Damage due to uninsured peril

  • Damage due to mechanical breakdown

Opting for a zero depreciation car insurance can save you from burning a big hole in your pocket in case of an accident. It is always wise to buy a zero depreciation car insurance to protect your vehicle from all threats and damages.

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