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Everything About Zero Depreciation Car Insurance Cover
Mar 2, 2022

All You Should Know- Zero Depreciation Car Insurance

Due to regular wear and tear, the value of the car depreciates with time. The car loses its value as it ages. This also affects the claim settlement. Wondering, why? Let us help you understand. So suppose that your car meets with an accident. You would raise a claim if you have a car insurance policy in place. Now, there are chances that you may not be able to recover the complete costs of the parts which have been replaced. Confused? This will happen because the insurance company pays the repair bill only after deducting the car parts depreciation amount. It implies that you would need to pay the remaining amount of the repair bill from your pocket. Yet, you can recover the complete cost of the parts that have been replaced. This is possible only when you have a zero depreciation car insurance cover. Let us dig into understanding more about zero depreciation Car Insurance. But before that let us get the basics clear.

What is Depreciation in Car Insurance?

In simple words, depreciation in car insurance is the value decrease of the car. A common reason for it is the natural wear and tear that happens with time. It means that the older the car, the higher is going to be the depreciation. The motor insurance companies deduct the depreciation amount when settling the insurance claims which reduces the claim amount.

What is Zero Depreciation Car Insurance?

The depreciation cover is also referred to as the nil depreciation or bumper to bumper cover. The zero depreciation is an add-on cover that makes the motor insurance company settle the claim amount. It is done without taking the depreciation on the different parts of the car into contemplation. This enhances the claim amount of the policyholder and can be availed for a specified number of times during the policy term. You should also Compare Car Insurance rates and make an informed choice. *Standard T&C apply How is the Depreciation Calculated? IRDAI has set depreciation rates for the cars plying on Indian roads. Here is a rundown of the depreciation rates based on which the depreciation of the car is calculated:
  • For fiber glass components: 30%
  • Nylon, rubber, batteries, and plastic parts: 50%
  • For wooden parts: In the first year- 5%, second year- 10% and so forth
The table below shows the percentage of depreciation in vehicles and metallic parts:

Vehicle Age

Depreciation Percentage

Not exceeding 06 months 5%
Exceeding 06 months but not 01 year 15%
Exceeding 01 year but not 02 years 20%
Exceeding 02 years but not 03 years 30%
Exceeding 03 years but not 04 years 40%
Exceeding 04 years but not 05 years 50%
  For Metallic Parts

Vehicle Age

Depreciation Percentage Value

Below 06 months Nil
Exceeding 06 months but not 01 year 5%
Exceeding 01 year but not 02 years 10%
Exceeding 02 years but not 03 years 15%
Exceeding 03 years but not 04 years 25%
Exceeding 04 years but not 05 years 35%
Exceeding 05 years but not 10 years 40%
More than 10 years 05
*Standard T&C apply

Important Things to Remember- Zero Depreciation Car Insurance

  • The zero depreciation add-on cover applies only to cars that are less than 05 years old.
  • It covers the cost of cars part depreciation during insurance claims and not the compulsory deductibles
  • In case the car is more than 05 years old, the zero depreciation cover cannot be chosen.

The Bottom Line

The key role of zero depreciation cover during claims is to save money that otherwise you would end up paying. So, if you plan to buy car insurance online, consider choosing a zero depreciation cover and adding it to the base plan. Choosing the right add-ons for your vehicle is extremely important. And if you already have an existing car insurance policy and the car is less than 05 years old, even then opt for a zero depreciation car insurance cover. Steps like these help you save money while making insurance claims.   Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.

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