It is not uncommon to see policyholders get a rude shock when they see the deductions made on insurance policy before reimbursing the repair bill amount. Not knowing about these deductions leads to poor choices in getting coverage for a car insurance. For repair bills reimbursement, depreciation is one major component which is deducted by an insurance company before the payout towards a claim. . It is important to note that this wouldn’t have been the case if the policyholder had opted for a zero depreciation add-on with his/her comprehensive insurance policy.
If you are interested to explore the concept of zero depreciation further, then you are at the right place. We look at everything there is to know about zero depreciation and how you can use it to your advantage for your car repairs and policy claims.
A car insurance policy provides coverage as per the choices made by the policyholder. The base coverage is a comprehensive policy (which covers bodily injury and car repairs to own as well as to the other party). Then there are add-ons which improve the extent of coverage your four wheeler gets. Zero Depreciation is one such add-on that you can add to your policy coverage for a nominal amount.
As an add-on, Zero Depreciation (also known as zero dep insurance, Nil-Dep insurance, or bumper to bumper insurance) provides coverage without deducting the depreciation value. As you know, an asset depreciates in value over time. Similar is the case with your car. Its value starts reducing the moment you take its delivery from the showroom.
The below are different components and its applicable depreciation rates as per IRDAI:
With this add-on, you can be assured that the insurance company will not be deducting the applicable depreciation amount when processing your claims.
Zero depreciation is usually 15-20% of the premium amount and is an ideal add-on for certain scenarios. Take a look at some cases where zero depreciation makes total sense to opt for with your insurance policy:
Zero depreciation is based on a few crucial factors such as
You may want a compelling reason to pay additional upfront for future costs. So, here is the key difference between comprehensive and zero depreciation insurance:
|Pointers||Insurance with zero depreciation||Insurance without zero depreciation|
|Coverage during claims||Better coverage as depreciation amount is not deducted before payout of claim||Lower coverage as depreciation is factored for metal, fiberglass, and plastic parts before payout of claim|
|Who it is good for?||Ideal for those who don’t want to pay for claims from their pockets and bumper to bumper coverage||Ideal for those who don’t want to pay higher premium and are ok with higher repair bills to be borne from own pocket|
|Number of claims allowed||Usually only two claims are allowed to prevent misuse||More than one claim is allowed by many insurance companies|
The below table is a great way to show the savings incurred even after paying extra to opt for zero depreciation:
First, we have a look at the depreciation calculated on a Rs. 7-lakh car
A. Depreciation table
|Repair bill breakup||Repair Amount (Rs.)||Rate of depreciation||Amount of depreciation (Rs.)|
B. Comparison table
|Cost of claim amount||With Zero Dep Add-on||Without Zero Dep Add-on|
|Basic premium (A)||12,000||12,000|
|Premium on zero depreciation cover (18% of premium for illustration purposes)(B)||2,160||–|
|Policy amount = A+B (C )||14,160||12,000|
|Cost of repair as per first table (D)||21,500||21,500|
|Depreciation amount paid by policyholder (E )||–||6,850|
|TOTAL costs borne by policyholder = C+E (F)||14,160||18,850|
It is clear that even with an additional cost of Rs. 2,160, the policyholder ends up saving Rs. 4,690 on the claim made.
Buying a zero depreciation car insurance with Turtlemint is very simple. All you need to do is fill up information about your car and select Zero Depreciation as an add-on. You will be presented with quotes from different providers. You can pick one that is the best and lock it for your four-wheeler. In just 3 steps, you can buy car insurance online by visiting our secure website:
When you set out to buy a Zero Depreciation Car Insurance, you will need to factor in quite a few things. You will need to check the different quotes and also be able to add the right add-on to provide solid protection for your four-wheeler. This will ensure that you get a winning deal in online insurance quotes.
At Turtlemint, we will help you simplify the entire process of buying a Zero Depreciation Car Insurance online. Some reasons why you can look forward to purchasing a zero depreciation policy from us include
Car Insurance Companies