With so many insurance companies portraying their policies and rules blinding our choices through multiple suggestions around. Many fail to make the right choice while buying insurance for their vehicle. And even if they do, insurers are aware of the minimal coverages like third party & comprehensive.
However, when buying a car insurance policy, there is much more than third-party coverage. Car insurance coverage offers extensive add-ons for resembling premiums, offering full safety for you and your car. One such major add-ons are the zero depreciation add-on policy.
Zero depreciation is the decrease in the cost of your car, due to its natural wear and tear due to its age. The older your car is, the higher is its depreciation. The depreciation guidelines have been laid down by the Insurance Regulatory and Development Authority of India that allows a fair and uniform rate of depreciation that is decided for cars.
The depreciation value of the damaged parts won’t be deducted from the claim amount, and that’s how it helps you save a huge amount of money. A perfect insurance policy for new drivers, and for luxury car owners that helps you save your time and money.
Zero depreciation car insurance in detail:
One of the mandatory documents to drive a car on Indian roads is car insurance. The basic one is third-party insurance and one with extensive coverage is comprehensive car insurance. Comprehensive car insurance has more features and the option to purchase add-ons. Zero depreciation car insurance is when the add-on of zero depreciation is included in the cover. Zero depreciation car insurance has a higher premium than car insurance but if your car is old and you ever file a claim, you will realize it is worth every penny.
Top benefits of zero depreciation car insurance
- Helps you save money – Car insurance is brought to save money and also to ensure your car stays just like when it was new even after a long time. Every time you file a claim, the depreciation of your car is considered and the insurance company does not pay for the same. This goes out of your pocket unless you have the zero depreciation cover. This helps you save money whenever you file a claim.
- You can get a higher claim amount – Every time you file a claim the amount that is calculated as depreciation is not covered by the insurer. For example, if you have submitted a claim for 10,000 rupees and the depreciation of that particular part is 2,000 rupees, then without the zero depreciation cover, you will receive an amount of 8,000 rupees. If you have bought the add-on, then you will receive the entire amount.
- Get complete peace of mind – The point of getting car insurance is to have peace of mind irrespective of how bad the situation is. Every time there is an accident, depreciation is calculated on every part. You can depend on this policy no matter how old your car is or how extensive the damage is. The major chunk of expense after the actual parts is the depreciation.
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- Possibility of multiple claims – There is no limit on the claims you can make till the total of your claims is lesser than your sum assured. The zero depreciation cover is valid for every claim you make throughout the tenure of the insurance.
What are the factors affecting zero depreciation car insurance?
The difference between the premium of comprehensive insurance and zero depreciation car insurance is the addition of the zero depreciation cover and the cost of it. The cost depends on a few factors and let’s take a quick look at these. These factors highly influence the rate of depreciation and that is why cannot be ignored.
- How old is your car? – As mentioned before, the older the car, the higher the premium. Every part of a car has a different degree of depreciation based on the guidelines by IRDAI. For example, the rubber parts will not depreciate at the same rate as the steel bits. Apart from this, there is a percentage set that is applicable to all cars.
|Age of Vehicle||Depreciation|
|Not Exceeding 6 months||5%|
|Exceeding 6 months but not exceeding 1 year||15%|
|Exceeding 1 year but not exceeding 2 years||20%|
|Exceeding 2 years but not exceeding 3 years||30%|
|Exceeding 3 years but not exceeding 4 years||40%|
|Exceeding 4 years but not exceeding 5 years||50%|
- What is the make and model of the car? – The make and model of the car will decide the precise depreciation value as the design of each engine and the components that make it are different.
- What is the location of the insured car? – The location of the insured car is important to know the statistics of the city. The history of theft, natural calamities, and other such factors are taken into account when the premium is decided.
Who does not wish for their car to be as good as the day it was bought? Zero depreciation insurance not only ensures you can give your car the best standard of upkeep but also ensures that you are not penalized for the depreciation.