Zero depreciation cover may be the shield your car insurance misses

A zero depreciation add-on in car insurance can help you avoid hefty out-of-pocket repair costs by covering the full replacement value of parts, even after wear and tear

Many car owners assume that a comprehensive insurance policy will take care of all expenses in case of an accident. In practice, however, insurers deduct the depreciated value of parts before settling claims. This is where a zero depreciation (zero dep) cover makes a difference, ensuring minimal out-of-pocket costs.

 

This add-on cover can prove particularly useful for new, luxury, or high-value vehicles, where repair bills tend to be steep.

 

What is zero depreciation cover?

Zero depreciation cover is an optional add-on to a comprehensive car insurance policy. Unlike standard policies that factor in depreciation of parts, this cover ensures that the insurer pays the full replacement cost of parts such as bumpers, headlamps, side mirrors, and plastic fittings.

 

For example, without zero dep cover, a damaged bumper worth Rs 10,000 may fetch only Rs 5,000 from the insurer after depreciation. With the cover, the entire Rs 10,000 is reimbursed.

 

Who should consider it?

Industry experts point out that zero depreciation cover is not necessary for every driver, but certain categories of vehicle owners may benefit significantly:

• New car owners: Cars lose value quickly in the first few years, and this cover ensures full reimbursement of repair costs. 
• Luxury and sports car owners: Most parts are expensive, and depreciation deductions can be sizeable. 
• New or inexperienced drivers: With a higher chance of minor accidents, the cover provides peace of mind. 
• Drivers in accident-prone areas: Those in high-traffic or high-risk zones may find the add-on particularly valuable.

 

Points to note before buying

While zero dep cover offers greater protection, it comes with certain conditions:

• It is usually available for cars up to five years old (some insurers extend to seven years). 
• Most policies limit the number of zero dep claims per year. 
• Premiums are higher, typically 10-20 per cent more than a standard policy. 
• It does not cover routine wear and tear, engine damage, tyres, or batteries. 
• Deductibles under the base policy still apply.

 

Is it worth the higher premium?

For owners of newer or high-value cars, the additional premium can be offset by savings during claims. Even in minor accidents, the difference between depreciated and full claim settlement can run into thousands of rupees.

 

Zero depreciation cover offers a way to protect yourself against hidden repair costs and make your insurance truly comprehensive. For many urban drivers, the peace of mind it brings may outweigh the higher upfront cost.

 

(With inputs from PTI)