Like every other commodity, your car is also subject to depreciation, i.e., the devaluation with time due to wear and tear. The onus of bearing the depreciation liability originally rests with the car owner and not the insurance provider. Thus, at the time of a claim settlement, the amount of depreciation applicable on your car and its parts get deducted from the compensation amount thereby reducing it. This is where the Zero Depreciation add-on cover comes in handy.
Zero Dep Car Insurance - A zero depreciation add-on cover, also known as Nil Depreciation and Bumper-to-Bumper cover, is a popular car insurance add-on cover which is most commonly opted by car owners along with their comprehensive car insurance policy. It shifts the liability of bearing the depreciation of your car and its parts from you to the insurance company against a nominal premium. Sometimes, even a single claim helps you recover the entire zero depreciation cover's premium amount.
A zero depreciation add-on covers all parts of your car at 100% except tyres, tubes and batteries which are covered at 50%. Generally, insurers allow 2 zero depreciation claims during the policy tenure, however, there are some insurers like IFFCO Tokio who allow you to make an unlimited number of zero depreciation claims during the tenure of your car insurance policy.
Here is the list of types of people who should buy the zero depreciation cover:
1. New Car Owners – New car owners who have purchased a new car should opt for this cover as depreciation starts since the car is sold. Hence, if a new car gets damaged, one might not get a good amount of claim without this add-on cover.
2. People who have Luxury Cars that have Expensive Parts – If you own a luxury car and it gets hurt due to an accident, it clears that you will have to spend a huge amount on its repair. Hence, a complete amount of claim can only help you to get your car repaired easily.
3. People Living in Accident-Prone Areas – People who reside in accident-prone areas are more likely to get indulged in accidents. Therefore, in order to receive a relevant amount of claim to get their cars repaired they should pick the zero-depreciation cover.
4. New Drivers - People who have just begun to drive a car or a new driver could take a little more time to become an expert and are more likely to get involved in a collision. Hence, this add-on cover is a must for such people.
5. Regular Car Users – Since accidents can bring any amount of damage, hence, it may not be easy for even old car owners to bear its cost of repair. Hence, if your car is eligible to be covered with the zero depreciation plan, you should opt for it.
The benefits of zero depreciation car insurance cover are mentioned below:
Part of Car |
Depreciation Rate Without Zero Depreciation Cover |
Depreciation Rate With Zero Depreciation Cover |
Paint work/Rubber/Nylon /Plastic parts, tires and tubes, batteries and airbags parts |
100% |
50% |
Fibre glass parts |
100% |
30% |
Glass parts |
100% |
Nil |
Following is the impact of zero depreciation / nil depreciation / bumper to bumper insurance.
Age of Car |
Depreciation Rate Without Zero Depreciation Cover |
Depreciation Rate With Zero Depreciation Cover |
Under 6 months |
Nil |
0% |
6 months to 1 year |
5% |
0% |
1-2 years |
10% |
0% |
2-3 years |
15% |
0% |
3-4 years |
25% |
0% |
4-5 years |
35% |
0% |
5-10 years |
40% |
0% |
Above 10 years |
50% |
0% |
Part of Car |
Depreciation Rate Without Zero Depreciation Cover |
Depreciation Rate With Zero Depreciation Cover |
Paint work / Rubber / nylon / plastic parts, tires and tubes, batteries and airbags parts |
50% |
0% |
Fibre glass parts |
30% |
0% |
Glass parts |
Nil |
0% |
In most cases, the zero depreciation cover costs approximately 15%of the car insurance premium. Though it may seem like a steep price for an add-on cover, it is worth the cost as the compensation amount will prove to be significantly higher than the premium.
These are a few things to keep in mind when purchasing a zero depreciation car insurance:
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