a comprehensive car insurance policy may not be as comprehensive as it sounds. when a claim is filed, insurers deduct depreciation on every replaced part before settling the payout. the older the car, the less the insurer pays . this leaves the owner to cover the gap. zero depreciation cover is an add-on that removes that deduction .
how depreciation works in a standard policy
depreciation is the reduction in a car’s value over time due to wear and tear. every part of a car depreciates at a different rate . plastic and rubber components lose value faster than metal parts .
a damaged bumper worth ₹10,000 may fetch only ₹5,000 from the insurer after depreciation . the owner pays the rest out of pocket. with zero depreciation cover, the insurer pays the full ₹10,000 . the difference can be significant.
typical depreciation rates (for cars under 5 years) :
| age of vehicle | depreciation rate |
|---|---|
| less than 6 months | 5% |
| 6 months to 1 year | 15% |
| 1 to 2 years | 20% |
| 2 to 3 years | 30% |
| 3 to 4 years | 40% |
| 4 to 5 years | 50% |
these rates are set by the insurance regulatory and development authority of india . for older vehicles, depreciation can be 40-50% on rubber and plastic parts and 30-40% on fibre components .
what zero depreciation cover does
zero depreciation cover waives the depreciation deduction on replaced parts during a claim . the insurer pays the full cost of repair or replacement for eligible parts . it covers plastic, rubber, and metal parts, ensuring comprehensive protection .
how a claim changes with zero dep cover :
| item | cost | standard payout (with dep) | zero dep payout |
|---|---|---|---|
| front bumper | ₹15,000 | ~₹9,000 | ₹15,000 |
| headlamp | ₹18,000 | ~₹12,000 | ₹18,000 |
| side mirror | ₹8,000 | ~₹5,000 | ₹8,000 |
| total | ₹54,000 | ~₹35,000 | ₹54,000 |
the gap widens when damage involves multiple plastic, rubber, or fibre parts . zero depreciation can be particularly valuable for new cars, premium vehicles, and daily drivers in urban areas .
who should consider zero depreciation cover
new car owners. cars lose value quickly in the first few years. this cover ensures full reimbursement of repair costs . zero depreciation cover is typically available for cars up to 5 years old .
luxury and premium car owners. parts for these cars are expensive. depreciation deductions can be sizeable. a single claim can justify the extra premium .
drivers in high-traffic or accident-prone areas. those in congested urban areas or regions with poor road conditions face higher accident risk. the add-on offers financial protection .
new or inexperienced drivers. with a higher chance of minor accidents, zero depreciation provides peace of mind .
those who drive daily in cities. for frequent commuters in cities like mumbai, bangalore, or delhi, fender benders and parking scrapes are common . the cover reduces out-of-pocket costs significantly .
what is excluded
zero depreciation does not cover everything . the following are not covered:
- tyres, tubes, and batteries. unless specifically included in the policy wording .
- engine damage from water ingress or oil leakage. a separate engine protection add-on is required .
- mechanical breakdowns and wear and tear. these are considered maintenance, not accidental damage .
- consumables like engine oil, coolant, nuts, and bolts. a separate consumables cover may be needed .
- total loss or constructive total loss. if the car is damaged beyond repair or repair costs exceed a certain percentage of the insured declared value, the claim is settled based on the idv. zero depreciation benefits do not apply .
key limitations and costs
higher premium. adding zero depreciation cover increases the premium by 15-30% . for an own-damage premium of ₹15,000, the add-on might cost an additional ₹2,000-₹4,500 per year .
claim limits. most insurers limit zero depreciation claims to 2-3 per policy year . exceeding this limit means standard depreciation deductions apply.
vehicle age limit. the cover is usually available only for vehicles up to 5 years old . some insurers extend it to 7 years for well-maintained cars, but terms become more stringent .
no claim bonus impact. claims made under zero depreciation cover reset the no claim bonus to zero at the next renewal, just like standard comprehensive claims . adding ncb protection cover separately can help preserve the bonus.
frequently asked questions
1. is zero depreciation cover worth it for a new car?
yes. new cars depreciate the most in the first few years. a single claim can save far more than the additional premium .
2. can zero depreciation cover be bought for a car older than 5 years?
most insurers do not offer it beyond 5 years. some extend to 7 years for well-maintained vehicles, but the cost-benefit may not justify it .
3. does zero depreciation cover all repairs?
it covers repair or replacement of eligible parts without depreciation deduction. exclusions like tyres, batteries, engine damage from water, and mechanical breakdown still apply .
4. how many zero depreciation claims can be made in a year?
most policies limit zero depreciation claims to 2-3 per year. claims beyond that revert to standard depreciation deductions .
5. does zero depreciation affect the no claim bonus?
yes. filing a zero depreciation claim resets the ncb to zero at the next renewal, just like any other own-damage claim .
