Zero Depreciation in Car Insurance: A Complete Guide

A car insurance policy is a mandatory requirement as per the traffic laws of India. If you have a car to your name, you should also have a valid car insurance policy on it as specified in the Motor Vehicles Act, 1988. Thus, you need to buy a car insurance policy for your car.

When it comes to buying a car insurance policy, the law only requires valid third party liability coverage. This coverage covers the financial liability that you suffer if you hurt an individual physically or if you damage someone’s property. A third party policy does not cover the damages suffered by your car itself. Though the policy fulfils the legal requirement, it does not cover car-related damages. That is why a comprehensive policy makes more sense for covering your car completely.

A comprehensive car insurance policy is one which covers the third party liability as well as the damages suffered by the car itself. The policy, therefore, provides a wider scope of coverage compared to third party plans. Moreover, under comprehensive car insurance plans, there are many optional coverage benefits, called add-ons, which are available. These add-ons help in enhancing the coverage further. One such add-on is the zero depreciation add-on which is quite popular. When you opt for this add-on in your comprehensive car insurance policy, the policy becomes a zero depreciation car insurance plan or a bumper to bumper insurance policy.

What is zero depreciation car insurance?

A zero depreciation car insurance plan is a comprehensive car insurance policy having the zero depreciation add-on added to it. This policy does not reduce the claim amount because of the depreciation of the car’s parts. In case of a claim, the full cost of the parts repaired or replaced is paid by the policy. A zero depreciation policy, therefore, pays a comprehensive claim in case of damages suffered by your car.

How does zero depreciation plan work?

Under normal comprehensive car insurance plans, the normal wear and tear of the parts of the car which occur due to usage are not covered. As such, when the parts are damaged and a claim occurs, the insurance company deducts the applicable depreciation from the actual value of the parts of the car. When depreciation is deducted, a lower amount of claim is paid. However, when the damaged parts are repaired or replaced, the full cost of such parts is incurred. Since depreciation has been deducted from the claim, you face the responsibility of paying for the excess cost.

The rate of depreciation which is deducted by the insurance company is fixed by the Insurance Regulatory and Development Authority of India (IRDAI). The rates are different for the different parts of the car and are as follows –

So, if the fibreglass parts of the car are damaged and you incur a cost of INR 10,000 in repairs, a normal car insurance policy would pay only INR 7000 in the claim as INR 3000 would be deducted towards depreciation.

A zero depreciation cover comes in handy in this case. As per the terms of the cover, the depreciation suffered by the car’s parts would also be covered. Thus, at the time of a claim, the deduction for applicable depreciation is not done. The insurance company pays the full cost of repairing or replacing the damaged part of the car. In the above example, even if the applicable depreciation on the fibreglass parts is INR 3000, the insurance company would pay the full cost of INR 10,000 as claim if you have bought the zero depreciation cover.

Who should buy zero dep insurance?

A zero depreciation car insurance policy is suitable in the following instances –

• If you have bought a brand new car
• If you have a premium car whose parts are very expensive
• If you are not an experienced driver and face the threat of accidents
• If you use your car frequently and want the best coverage for it
• If you live in an area where accidents are quite common

Benefits of zero depreciation car insurance plans

A zero depreciation policy is very useful because of the following benefits that it offers –

• The policy pays a higher amount of claim which covers the depreciation suffered by the car’s parts. As such, your out-of-pocket expenses reduce
• The premium for adding zero depreciation add-on to your basic car insurance policy is quite minimal compared to the benefits that the cover offers
• You can get peace of mind knowing that even if the parts of your car are expensive your bumper to bumper car insurance policy would take care of the costs in case of any damages that you suffer

What is covered under zero dep car insurance plans?

Under zero depreciation policies, the following types of claims are covered –

• Financial liability faced when an individual is physically hurt, wounded or killed by your car
• Financial liability faced when your car damages a property belonging to someone else
• Damages suffered by the car due to man-made conditions like fire, riots, malicious acts, etc.
• Damages suffered by the car due to natural calamities like earthquakes, floods, landslides, storms, etc.
• Damages suffered when your car is being transported from one place to another
• Depreciation suffered by the parts of the car

What is not covered under zero depreciation car insurance plans?

Though a zero depreciation policy provides an all-inclusive scope of coverage, there are few instances of claims which the policy would not cover. These include the following –

• Damages suffered when you were driving the car without a valid driving license
• Damages suffered when you were driving the car under the influence of intoxicating substances
• Damages suffered when you were driving the car outside India
• Damages suffered when you were using the car in violation of its usage limitations
• Damages suffered when the car was being used for criminal activities
• Electrical or mechanical breakdown
• Damages suffered by the engine of the car due to oil leakage, water seepage, etc.

Things to remember about zero depreciation coverage

Before you opt for a zero depreciation car insurance policy for your car, here are some pointers which you should keep in mind –

• A bumper to bumper insurance policy costs more than a basic comprehensive car insurance policy. This is because of the fact that a zero depreciation policy has a zero depreciation add-on added to a comprehensive plan. That is why the cost of the add-on is added to the premium of the comprehensive policy to arrive at the total premium
• A zero depreciation cover is available only for cars which are not more than 5 years old
• There is a limit to the maximum number of zero depreciation claims that you can make over the entire coverage period. The limit is usually a maximum of two claims. However, nowadays, there are policies which allow unlimited zero depreciation claims. So, check the policy conditions before buying the coverage
• A compulsory deductible would be applicable in the car insurance policy. Though the claim would cover the depreciation on the car’s parts, the compulsory excess would have to be borne by you in all claims

How to buy zero depreciation car insurance?

You can get a zero depreciation cover for your car by opting for a comprehensive car insurance plan and then adding the zero depreciation add-on to the coverage. To buy the policy you can choose the online medium and buy through Turtlemint. Turtlemint lets you compare the best zero depreciation policies offered by leading car insurance companies. You can compare the available plans and choose one which has the best coverage at the lowest premiums. The way to buy zero depreciation cover through Turtlemint is as follows –

• Go to https://www.turtlemint.com/car-insurance and enter your car’s registration number
• Enter your car’s details like the make, model variant, manufacturing year, registration year, fuel variant, etc.
• Also provide the details of the previous policy and whether there were any claims
• You would then be able to check the list of plans available in the market
• Choose the ‘zero depreciation’ add-on and the premiums would be updated
• You can then compare the available plans and choose the policy that you want
• Pay the online premium and the policy would be issued

Renewing zero depreciation policies

Car insurance policies need to be renewed at regular intervals so that you can enjoy uninterrupted coverage. To renew you can renew the policy from the website of the company whose policy you have bought. Alternatively, if you have bought the policy from Turtlemint you can renew the plan from Turtlemint’s platform itself. Just log into your Turtlemint account, choose the policy and click on ‘Renew’. Pay the renewal premium and the policy would be renewed instantly.

A zero depreciation policy is an exhaustive coverage for your car. If you don’t want to pay for the high repair costs yourself buy a zero depreciation policy and get maximum coverage for your car.