This is a comprehensive introduction to zero depreciation car insurance that you can use to learn a little about this option before we delve deeper into it. In the world of car insurance, zero depreciation coverage has come into view as an asset for vehicle owners who are looking for comprehensive protection against financial losses associated with damages or accidents.
Zero depreciation insurance makes sure that policyholders get full reimbursement for the replacement or repairs without considering depreciation, unlike standard policies that regard car parts depreciation and reduce the payout for claims accordingly.
This is why zero depreciation car insurance is now quite popular among car owners who are looking to reduce out-of-pocket expenses and protect their investments in case of unpredicted events.
What is Zero Depreciation In Car Insurance?
Zero depreciation in car insurance is an additional or add-on coverage for which the insurer does not charge the depreciation of an insured car or vehicle. In other words, when you file a claim and seek compensation for repair or replacement, with zero depreciation car insurance, the insurance company will compensate you fully without considering the depreciating value of the car.
Moreover, the depreciation value of the damaged part will not be removed from the claim amount you are meant to receive. This helps you save money on claim filing.
How Does It Work?
Imagine you have a comprehensive auto insurance policy online without zero depreciation coverage. Then, you are driving down a small lane and your car comes in collision with a pole, causing significant damage to the body of your car.
You ask for fast towing assistance to take your car to the nearest body shop, this costs you money. If the age of your car is considered, the depreciation rate will be determined by the IRDAI.
Additionally, the insurance company will reimburse after removing a fixed portion which eventually leads to the final claim amount. Meanwhile, if you do not have zero depreciation coverage, the whole will be settled or covered out of your pocket.
Depreciation Chart by IRDAI
Here is the rate of depreciation according to the IRDAI:
| Age of Vehicle | Rate of Depreciation |
| Less than 6 months | Nil |
| Between 6 months and a year | 5% |
| Between a year and 2 years | 10% |
| Between 2 years and 3 years | 15% |
| Between 3 years and 4 years | 25% |
| Between 4 years and 5 years | 35% |
| Between 5 years and 10 years | 40% |
| Above 10 years | 50% |
Rate of Depreciation for All Car Parts by IRDAI
Here is a table illustrating the depreciation rate of all parts of a car by the IRDAI:
| Car Parts | Rate of Depreciation |
| Plastic/Rubber/Batteries/Nylon | 50% |
| Fibre Parts | 30% |
| Wooden Parts | 5% in the first year, 10% in the second year, and so on |
Benefits of Zero Depreciation Car Insurance
Below are some of the main advantages or benefits of purchasing zero dep car insurance:
- Peace of mind.
- Financial loss protection.
- Claim settlement amount increase.
- Affordable.
- Increased coverage.
- Better savings.
- Reduced out-of-pocket expenses.
These are the factors that you should consider before purchasing a zero depreciation car assurance policy.
Should You Opt for Zero Depreciation Insurance Cover?
If you have a relatively new car or you just recently purchased one, it is a good option to consider zero depreciation car insurance. Here are other reasons:
- If the spare parts of your car are expensive.
- You own luxury or expensive cars.
- If you want to mitigate out-of-pocket expenses.
- Living or driving in areas that are highly prone to accidents.
- New drivers.
- If the chances of damages or accidents are high.
- If you are a new driver.
- You do have a dedicated parking space.
Factors Affecting Zero Depreciation
When it comes to calculating zero depreciation car assurance premiums, multiple factors come into play. Here are some of the influencing factors that determine the cost of purchasing a zero dep car insurance policy:
- Fuel type.
- Place of registration.
- Coverage type.
- Insured declared value (IDV) or sum insured.
- Age.
- Engine type.
- Add-on coverages.
- Additional features installation.
- Make and model of your car.
- Location.
Zero Depreciation Car Insurance Vs. Comprehensive Coverage
Here is a table showing the factors that make zero depreciation car insurance different from comprehensive coverage:
| Features | Zero Depreciation | Comprehensive Insurance |
| Age of the car | Up to 5 years | Up to 15 years |
| Premium | Higher | Lower |
| Cost of plastic parts and repair | Maximum coverage | Less coverage |
| Claim Amount | Covers total damage or loss without considering depreciation | Depreciation of car parts are removed from the IDV. |
| Policyholder’s expense | Less burden | Heavier burden |
How To Get Zero Depreciation Car Assurance
It is important that you get the most out of your auto insurance. If you are looking to purchase a zero depreciation car insurance policy online, here are the steps you can follow:
- Research insurance companies.
- Compare.
- Select the level and type of coverage you need.
- Complete the application form.
- Upload the necessary documentation.
- Personalize your quote.
- Check the policy.
- Make premium payments.
- Get the insurance quote.
- Update regularly.
After you have made your premium payment, the insurance company will give you your policy documents through electronic means.
