“Why Should You Opt for Zero-Depreciation Cover in Car Insurance?”

Why Should You Choose Zero-Depreciation Cover While Buying Car Insurance?

Many car owners assume that a comprehensive car insurance policy is sufficient to protect them from all expenses in the event of an accident. However, the reality is different — insurers typically deduct the depreciated value of parts before settling claims. This means you may still end up paying a sizeable amount out of your own pocket.

To bridge this gap, insurers offer an additional rider known as Zero-Depreciation Cover (Zero-Dep). This add-on ensures that your claims are settled without considering depreciation on replaced parts, giving you near-complete financial protection. For new car buyers or those who want to minimize unexpected expenses, this cover is highly recommended.

What Exactly is Zero-Depreciation Cover?

Zero-Depreciation Cover is an add-on to your existing policy that ensures full replacement costs are reimbursed by the insurer, without factoring in depreciation of car parts such as bumpers, headlights, mirrors, fibre, and plastic fittings.

Illustration: Suppose your car’s bumper worth ₹10,000 gets damaged. Under a regular policy, you may receive only ₹5,000 after depreciation deductions. With Zero-Dep cover, the insurer pays the entire ₹10,000, drastically reducing your out-of-pocket burden.

Key Conditions to Keep in Mind

• Generally available for cars up to 5 years old (some insurers extend eligibility to 7 years).
• Most insurers restrict the number of Zero-Dep claims allowed per policy year.
• Premiums are 10–20% higher than standard policies, but the extra cost is offset by higher claim benefits.
• Does not cover normal wear & tear, engine damage due to oil leakage, tyres, or batteries.
• Standard deductibles of the base policy continue to apply.

Why Opting for Zero-Depreciation Cover Makes Sense

✔ Offers maximum reimbursement for accidental damages and part replacements.
✔ Ensures peace of mind for new and luxury car owners who face higher repair bills.
✔ Ideal for drivers in high-traffic cities where the likelihood of minor damages is higher.
✔ Protects long-term car value by reducing personal spending on expensive repairs.
✔ Particularly useful for first-time buyers who may not be fully aware of depreciation deductions.

Comparison: Standard Policy vs Zero-Dep Policy

Aspect	Standard Policy	Zero-Dep Policy
Claim Settlement	After deducting depreciation	Full replacement cost reimbursed
Premium	Lower	10–20% higher
Parts Covered	Depreciated value of metal, plastic, fibre parts	100% cost of all approved parts
Eligibility	All cars	Cars up to 5 years (some extend to 7 years)
Out-of-Pocket Expenses	Moderate to High	Minimal

Who Should Buy Zero-Depreciation Cover?

• New car owners – as parts are expensive and depreciation deductions are steep in the first few years.
• Luxury car owners – high-end models have costly spare parts and repairs.
• Urban drivers – frequent traffic increases the risk of minor accidents and damages.
• First-time buyers – ideal for those who want maximum financial protection with minimal surprises.
• Safety-conscious families – who prefer comprehensive coverage and financial security.

SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment or insurance advice. Readers must perform their own due diligence and consult a registered advisor before making any financial or insurance-related decisions. The views expressed are general in nature and may not suit individual objectives or financial situations.

Written by Indian-Share-Tips.com, which is a SEBI Registered Advisory Services