Buying a car is an important decision, and so is choosing the right car insurance policy. It might seem that it’s just insurance; why worry so much, but one needs to understand that it matters when any unfortunate event happens, and huge expenses hit hard on your pocket and peace of mind. So to avoid going through a bad experience to know this all, it is advisable to take an appropriate car insurance
What is depreciation in a car?
The value of a car goes on decreasing due to the passage of time, wear and tear, usage, and several other factors. This reduction in value is called depreciation.
What is zero depreciation car insurance?
The value of the car is selected as a base in deciding what is IDV in insurance
policy for the vehicle, and the value of the car goes on decreasing every year. So the amount that becomes payable to you under insurance also goes on reducing. To come out of this reduced value loop, zero depreciation car insurance came into the picture. As the name suggests, what is the advantage of zero depreciation car insurance policy is that it doesn’t consider the depreciation on cars. In a way, we can say that it assumes that the vehicle is not depreciated. It is also called the ‘Bumper-to-Bumper’ or ‘Nil Depreciation’ policy.
What is the benefit of zero depreciation car insurance?
Higher claim payable amount
As the depreciation is nil, the claim payable amount is higher. This is the main point of attraction for people buying zero depreciation policy.
Protection of your own funds
As the amount to be paid by the insurance company is higher, the amount that will flow out of your pocket is reduced, and your hard-earned money is safe and with you.
It is true that certain extra services are provided by car insurance companies if you opt for those. But this results in increased premium. However, these are available at affordable rates, which might help you.
What are the factors that affect zero depreciation car insurance?
Looking at what are the benefits the zero depreciation car insurance has to offer, one is always interested in buying this policy, but we first need to know what factors are taken into account while deciding on this one.
Age of the car
Zero depreciation car insurance is only available on new cars whose age is within the limit of 3 years. If your car is older than that, it is not possible for you to buy this insurance.
Premium to be paid
Premium amount is higher than a standard comprehensive policy, but it is safe to say that it compensates by giving you higher reimbursement in case you have to claim any amount under the same. Apart from that, there are specific add-ons available; you can also choose to buy from them.
A limited number of claims
The number of claims you can make under this policy is limited. Hence it is wise not to claim for small amounts and file for only the meritorious claims but important also to peruse all policy documents and be aware of how to claim car insurance
when in need.
The policy provides that depreciation will not be considered, but it is to be remembered that the holder of policy is still liable to pay the applicable deductible here.
Exclusions from Zero Depreciation Policy
Age more than three years
If your car is older than the age of 3 years, it is not possible to make a claim under this policy. This is the rule, and even if your car is a bit older than three years, you won’t be able to claim anything here.
Driving under the influence of alcohol/drugs
It is prohibited to drive under the influence of alcohol or drugs, and if you are driving in such a condition and your car suffers any damage, the insurance company will not honor your claim.
Driving without a valid driving license
If you don’t hold a valid driving license and while driving, you meet with an accident, the damages cannot be claimed under this policy.
Can the policy of Zero Depreciation be transferred to another person?
Yes, the policy can be transferred to another person as the policy is in the name of the vehicle and not the owner of the vehicle. This is what the advantage is of zero depreciation car insurance or, for that matter, any car insurance.
“I have a vehicle, and I hold it for personal uses. Now, if just once I give it to a friend for use for his business purpose and the car meets with an accident, can I make a claim under this policy?” asks Sushant
No, you cannot make a claim if your private vehicle was being used for commercial purposes when the accident has taken place.
How can I get a zero depreciation policy if my car is older than three years?
If your car is older than three years up to 5 years, then you can get this benefit as an add-on facility under your standard policy.