Zero Depreciation car insurance is for people with brand new luxury cars. Zero depreciation is also known as Nil Depreciation. Zero depreciation insurance is a car insurance policy that gives us the depreciation factor from the risk coverage, thus provides us a complete cover. It means that if your car is fully damaged following a collision, in that case, no depreciation is subtracted from the coverage of wearing out any body parts of the car excluding batteries. The insurance company will pay out the entire cost of the body part for replacement. Apart from that zero depreciation car insurance policy covers, 100% for all rubber & metal parts without deduction of depreciation.
The drawback of the zero insurance policy is that it does not cover engine damage due to water ingression or leakage of oil. Apart from that, it does not cover any mechanical breakdown, oil change & consumables are also not covered in this policy. The cost of the zero depreciation policy is between 16-20 percent of the standard policy premium & it is must buy for all the new cars.
Zero depreciation car insurance proves to be beneficial to the following :
- People having luxury cars
- Inexperienced drivers
- People living in Hilly-prone areas
- People who buy new cars
- People having small dents & accidents
- People having a car with expensive spare parts
Benefits of zero depreciation car Insurance Vs normal car Insurance
- Claim Settlement
Zero depreciation does not affect the claim settlement of the car insurance & the full compensation is to be paid to the insured in case of zero depreciation car insurance while on the other hand, in case of normal car insurance the claim settlement amount is received after a normal deduction of the depreciation.
- Premium Amount
The amount of premium in case of zero depreciation insurance cover is higher as compared to those in case of normal car insurance. The price of the zero depreciation car premium amount is 20% more than the normal car insurance. As a result of it, the full compensation amount is to be paid to the insured.
- Maintenance or Repairing cost
The maintenance or the repairing cost of fiber, rubber, glass & plastic body parts are to be bear by the insurer in case of zero depreciation car insurance whereas, in case of a normal car insurance cover these costs have to be bear by the insured.
- Age of the car
Zero depreciation car insurance usually covers or means for new car whereas normal car insurance can be considered for a car which is older more than 3 years after buying.
- Limit the number of claims
Zero Depreciation insurance cover may also limit the number of claims for the insured that you take annually otherwise the customer file claims for every little dent or minor problems just because they do not want to spend any small amount.
Terms Excluded in Zero Depreciation car insurance
- A zero depreciation plan is not offered for those car owners having a car more than 5 years old
- The plan does not apply to those vehicles that have clocked more than a specified number of a kilometer.
- It does not protect the car damage to its water ingression & oil leakage.
- Normal wear on car& car body parts such as tires, bearings & clutch plates is not covered by this type of insurance.
- The person not carrying a valid driving license is also not covered.
- The cost of oil used in cars such as gear oil, clutch oil, Brake oil, engine oil & coolant is not covered by this insurance.
- A driver is under the influence of drugs is excluded from the coverage.
Companies that offer Zero-Depreciation Insurance Covers
Top car insurance companies in India that offer the zero-depreciation benefit are:
- Oriental Insurance Co. Ltd.
- New India Assurance Ltd
- HDFC ERGO Motor Insurance
- Tata AIG Auto Insurance
The policy is only applicable to new cars under three years purchased by new car owners. Premiums for this type of insurance are higher than the standard insurance policy. It does not make sense to pay extra to insure cars that are more than three years old car. The biggest disadvantage is that the number of claims is limited & it just to prevent car owners from making claims for every small dent and scratch on the car.