Zero Depreciation Car Insurance Cover

Last Updated: Feb 24, 2022 | 2,418 Views

What is Zero Depreciation Car Insurance Cover?

This cover is offered as an Add-on with the regular car insurance plan. You pay a small amount of premium and you ensure that you get full compensation in case of repair or damage instead of just the depreciated amount. This cover is also fashionably called the “Zero Dep” insurance cover!

When you make a claim, the insurance company pays you after deducting values of some parts based on their depreciated value. Click to check the rates of depreciation applicable in car insurance.

So if you have taken the Zero Depreciation Insurance as an Add-on in your car insurance plan, the insurance company will pay the complete amount and not deduct anything for the depreciation rate.

Usually the Zero Depreciation Cover is allowed only for vehicles with an age of not greater than 2 or 3 years.

Let me explain this with the help of an example:

In case of an accident to your 1 year old car, some plastic component of your car got damaged and needed replacement. Suppose the cost of replacing the part is Rs. 7,000. Now the insurance company will pay you only Rs. 3,500 as part of the claim and you will have to bear the balance as the depreciation rate applicable on plastic parts is 50%. In case you have taken a Zero Depreciation cover as an Add-on with your car insurance plan, you will be eligible for a 100% claim. In this case, the full Rs. 7,000 will be processed in your claim. The increase in premium for the Add-on cover is a small amount compared to the savings you make.

So yes, it makes a lot of sense to take Zero Depreciation Car Insurance Cover.

Deepak Yohannan
Deepak Yohannan is the CEO of MyInsuranceClub. He enjoys writing on Personal Finance and contributes regularly on sites like Reuters & Moneycontrol. He is a strong proponent of online insurance and is often found pointlessly babbling about it!