Zero Depreciation Car Insurance

You have just bought a brand-new car - but a few months later, a minor accident leaves your bumper badly damaged. Upon filing a claim, you expect your insurance to cover the full repair cost, but you are instead left surprised and frustrated. The simple reason: While filing a claim, most standard car insurance policies will deduct the depreciation value of your car - so you end up paying a majority of the car’s repair bills from your own pocket! Here is where Zero Depreciation Cover for your car insurance helps bring the change. So, how does this add-on affect your insurance?

Zero depreciation is an add-on cover for your car insurance policy where the total cost of repair or replacement of car parts can be claimed by the policyholder, in case of accidental damage. Simply put, you don’t pay depreciation on eligible parts during claims. This add-on is mostly incorporated in comprehensive car insurance policies to ease the financial burdens caused by the wear and tear of your vehicle.

• Without Zero Depreciation Cover

The insurer subtracts the depreciation of the car, so you have to pay part of the repair bill.

• With Zero Depreciation Cover

The insurer pays the full cost for parts (minus standard deductible), so your personal expenses are minimised.

Zero Depreciation Cover brings with it the following features:

• Full claim on plastic, metal, fibre parts

It allows you a full claim amount on replacement or repair of vehicle components of plastic, metal, fibre, etc, without depreciation deductions.

• 2 claims per year

Most policies generally allow 2 zero-depreciation claims per year for your added convenience.

• Ideal for cars ≤ 5 years/luxury vehicles

If your car is less than 5 years old, whether new, luxury or driven in high-risk areas, it is important to opt for this cover.

Zero Depreciation Car Insurance works in a simple three-step process:

Step 1: File an Own-Damage Claim

Begin by reporting the accident or damage to your insurer.

Step 2: Zero Depreciation Cover Kicks In

After the claim, the insurer will ignore depreciation on eligible parts.

Step 3: Full Payout

Ultimately, you will be able to receive the full cost of parts replaced, minus the standard deductible.

Here are the key benefits of why the Zero Depreciation add-on is a must-have to incorporate into your car insurance policy:

• Budget-Friendly Add-On

Even though incorporating this add-on slightly increases the premium, the cost of this add-on itself is low and affordable to purchase.

• Full claim refunds

While filing a claim, this cover provides comprehensive protection for expensive vehicle components like plastic, rubber, metal, and fibre parts.

• Added Financial Protection

By providing an increased amount for claim settlement, it helps cover repair costs so you do not have to pay for them from your pocket, enhancing financial safety.

• Better Resale Value

If the car is well-maintained and you choose to sell it, it provides an improved resale value.

• Great for new, luxury, or heavily driven vehicles

For those car owners who have purchased new, luxury or frequently drive their cars, this cover is a means to ensure added financial protection against damages.

• Ensures Peace of Mind

With the help of this policy, there is overall protection provided that saves on out-of-pocket expenses, so you can drive without stress and also save for the long term, with no surprises during claims.

Every insurer’s policy terms may vary regarding coverage and benefits. That is why it is important to read the fine print about this policy, including certain factors about eligibility and limits that come with this add-on cover:

1. Age cap

When it comes to zero depreciation cover, most insurance policies provide it for cars that are up to 5 years old. However, in some cases, certain insurers may extend to 7+ years if they find that the car is well-maintained.

2. Claim limits

Most policies are known to limit the offer to 2 claims for zero depreciation per policy year.

Check out the items that are not covered by this add-on:

• Compulsory Deductibles

Mandatory deductibles will not be covered, and only the car’s depreciation will be covered. Deductibles will have to be paid for separately.

• Consumables

No compensation will be provided under this add-on for consumables such as nuts, bolts, screws, gearbox oil, brake oil, lubricants, etc.

• Replacement of certain parts

If not otherwise mentioned in the policy, this add-on will not cover the replacement of certain vehicle parts like tubes or tyres.

• Mechanical or Electrical Breakdown

This cover will not be provided on account of regular wear and tear, or due to sudden failure of the engine or mechanical issues.

• Driving Under Influence

Damages arising to the car if the driver is in an intoxicated state, under the influence of alcohol or drugs, will not be covered in the repair bill.

• Driving without a valid licence

If the driver is found to be driving with an invalid driving license and meets with an accident, the insurance company will not cover the damages.

• In case of Total Loss

In case of an accident that causes the total or constructive loss of a car, zero depreciation cover will not apply during claim settlement, but the current market value will be considered.

Zero Depreciation add-on becomes vital to purchase for the following people:

• New Drivers or Car Owners

For newly-learned drivers, who are fearful of driving or those who have just purchased a new car, this cover becomes beneficial for enhanced protection against any damages that may arise.

• Luxury Car Owners

Owners of luxury or high-end cars need this cover as, during claims, these cars require expensive parts to be repaired or replaced, which will increase the overall repair costs.

• Drivers in High-Risk Areas

Those living in dangerous areas prone to accidents or natural disasters may have a higher risk of their car getting damaged, and will require this add-on cover.

• Frequent Travellers

This cover is also valuable for those who commute often, either for long drives or work, and may have to face busy roads, constant traffic and minor damage (like dents or bumps) to their cars.

It provides good ROI - the slightly extra premiums you will pay will make up for the repair costs, especially for new or luxury car owners.

The process of buying or renewing Zero Depreciation Car Insurance Online is made easy through Coverfox. Simply, follow the steps below:

1. Visit Coverfox

Go to the Coverfox website or access the app.

2. Select Car Insurance Renewal

Navigate to the 'Car Insurance' section and choose the option for policy renewal.

3. Enter Vehicle Details

Provide your vehicle's details like registration number, model, and make of the car.

4. Choose Zero Depreciation Add-On

While renewing, select the Zero Depreciation add-on cover to include it in your policy.

5. Review and Compare Policies

Review the available policies and select the one that suits your requirements, ensuring it includes Zero Depreciation coverage.

6. Make Payment

Proceed to pay for the renewal by selecting the preferred payment method.

7. Verify Details and Confirmation

Verify all the details provided before finalizing the renewal. Once done, you'll receive a confirmation of the renewed policy.

Incorporating a zero depreciation add-on cover will slightly increase the car insurance premium. However, there are certain other factors that will also play a role in impacting the premium amount. These are:

• Car Age

This cover is directly dependent on the age of your car. For this reason, the older the age of the car, the higher the premiums will be imposed.

• Make and Model of Car

Depending on the make and model of the car, the parts used by these cars will differ as well. Luxury or high-end cars will have higher premiums due to their expensive parts and the costs required to repair them.

• Geographical Location

Based on the location the driver lives in, the premiums will be higher if the area is more prone to risks—including accidents and natural disasters.

• Fuel and Engine Type

diesel, CNG or electric. It will also increase for engines with higher cubic capacity.

• Installation of Accessories

There will be a different calculation for premiums if any new accessories or features are installed in the car.

• Claim History

Based on the claim history of the driver, if it is found that there is a high number of claims or accidents involved, the premium will automatically increase.

The Depreciation rates for cars depend upon two factors: age and parts of the car. IRDAI (Insurance Regulatory and Development Authority of India) has set the depreciation rates for various cars based on these two factors to make it easier for both insurers and policyholders. Let us check them through the table below:

Car Age (for IDV calculation)

Metallic Parts (for repairs)

Component Type (all ages)

Let us see how Zero Depreciation cover stands out when incorporated into a comprehensive car insurance, compared to a standard comprehensive car insurance:

In all, a zero or nil depreciation add-on helps you get the full repair cost without deductions for wear and tear. While it may cost extra, it helps you save money on repairs, especially if your car is new or expensive.

The choice depends on you. While zero depreciation helps minimise out-of-pocket expenses for repairs by covering the full cost without factoring in depreciation, it comes at slightly higher premiums than standard comprehensive car insurance. Make your choice after considering your needs and budget carefully. Also, the availability and terms for zero depreciation insurance for cars older than 5 years vary among insurers, so check this carefully before purchasing.

The claim process can be carried out in 3 smooth and hassle-free steps:

Step 1: Report Claim

Notify the insurer after the damage or accident occurs.

Step 2: Select Zero Depreciation Add-On

Confirm your add-on is active so you can use it.

Step 3: Repair at Network Garage

Get the necessary repairs done, and the insurer will settle the full eligible amount (minus the deductible) directly with the garage.

Under a Zero Depreciation Car Insurance policy, the out-of-pocket expenses in case of a claim are significantly reduced compared to a standard policy. However, there might still be certain costs that the policyholder might need to bear:

• Deductibles

Some policies have deductibles, which are the portion of the claim amount that the policyholder agrees to pay before the insurance coverage kicks in. Zero Depreciation cover usually reduces deductibles, but they might still exist, requiring a payment from the policyholder.

• Non-Covered Expenses

Certain expenses might not be covered even under Zero Depreciation cover, such as consumables (like engine oil, nuts, bolts), consequential damages, or costs exceeding the policy's coverage limit.

• Policy Terms

The extent of coverage and specific terms can vary between insurers and policies. Always review the policy document to understand any clauses or exclusions that might require out-of-pocket payments.

Take the following example of how much difference a zero depreciation cover makes when it comes to a claim settlement:

In this way, a zero deprecation cover not only helps enhance your payout for claims but also reduces your personal expenses.

For four-wheeler insurance policies, here is a list of the various insurance providers and the number of times zero depreciation and non-zero depreciation claims can be raised by policyholders for each of them:

Disclaimer: The information about zero depreciation claims is provided for general knowledge only. Actual claim limits and policy details vary by insurance company and plan. Always read the full policy documents and check with the insurer before buying. The information provided above does not promote or favour any insurance company or product.