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Zero Depreciation or ‘Zero Dep’ car insurance policies seem to be gaining momentum with increasing awareness amidst car owners in India.
Car owners until recently could not get a complete cover for their cars. Insurance companies would take depreciation of the car into account which would go up to 40% or even higher depending on the age of the car.
In 2009 however, this scenario changed completely. Some general insurance companies selling car insurance introduced add-on covers which would offer maximum value additions over the basic benefits.
This add on cover includes ‘depreciation reimbursement’ which offers full claim without deduction for depreciation on the value of parts replaced.
In addition, this cover extends to the repairing costs of fibre, glass, rubber parts and plastic. Most add-on covers also offer benefits like daily allowance, no claim bonus protection (NCB), lost key replacement and a host of other benefits.
Tata AIG is one of the first companies to launch a zero depreciation add-on cover. Other companies that offer this cover are Bajaj Allianz General Insurance, Royal Sundaram, Chola MS etc. Apart from zero depreciation, the add-on cover by Bajaj Allianz includes roadside assistance and also covers any damage to the engine due to water.
Zero depreciation cover is available on fairly new cars and mostly do not cover cars that are more than 3 years old.
The premium is slightly higher than in a standard car insurance policy. In India, ‘zero dep’ cover mostly interests buyers of mid-segment to top-segment luxury cars. These car owners can easily afford the premiums and prefer to have an add-on cover for their expensive cars.