What is Zero Depreciation Car Insurance?

Zero depreciation car insurance is a type of add-on cover that ensures that you receive the full sum insured at the time of claiming your car insurance. Depreciation in motor insurance often refers to the loss in value of an asset over time due to factors such as age, wear and tear, and obsolescence.

However, with our nil depreciation cover, you receive the claim amount without the depreciation deduction, giving you the benefit of full coverage. Here is a comprehensive guide detailing zero depreciation insurance, its features, inclusions, and benefits.

Zero Depreciation in car insurance, also known as bumper-to-bumper or nil depreciation cover, is an add-on policy that ensures the policyholder receives the full claim amount without any deduction for depreciation on replaced parts. It is available with our standalone own-damage and comprehensive car insurance policies.

Zero depreciation means that when you claim your insurance, you receive the entire claim amount from the sum insured for the repair or replacement costs of car parts. Normally, when you file a claim for damages, the insurer deducts a certain percentage based on the depreciation of the car parts, especially those made of plastic, rubber and metal. With this add-on, the deduction is waived off, allowing you to get a higher reimbursement.

This add-on is particularly beneficial for new car owners or those with high-end vehicles, as it offers more comprehensive financial protection. However, it is important to note that this cover typically comes with a higher premium and might not cover all types of damages, like general wear and tear. It is ideal for those seeking to minimise out-of-pocket expenses in case of a claim.

How Does Zero Depreciation Insurance Work?

Depreciation refers to the deduction of the value of the asset over time due to wear and tear, ageing or usage. Vehicles, in general, are depreciating assets. For example, a new car will cost more than an older one.

Similarly, there is a certain depreciation associated with all the parts the car is made of. Parts made of plastic, metal, and fibre typically lose value over time, and each part has a different rate of depreciation.

This directly affects the car insurance premiums and claim amount, as insurers consider this amount and only pay for the replaced parts after deducting the depreciation amount from the claim amount. The insured person has to pay for the difference between the market value of the new part and the depreciated part of the car.

As a result, you receive less coverage and pay for the expenses of repair of such parts in case of an accident.

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Depreciation Rates in Car Insurance

As per the IRDAI, these are depreciation rates for various parts of the vehicle:

Parts	% of Depreciation
For all rubber/plastic parts/nylon, tubes and tyres, airbags and batteries	50%
For fibreglass component	30%
For all parts made of glass	Nil
For Paint Jobs	50% (applicable only on the material cost of total painting charges)

Rate of depreciation for all other parts, including wooden parts:

Age of Vehicle	% of Depreciation
Less than 6 months	Nil
More than 6 months but less than 1 year	5%
More than 1 year but less than 2 years	10%
More than 2 years but less than 3 years	15%
More than 3 years but less than 4 years	25%
More than 4 years but less than 5 years	35%
More than 5 years but less than 10 years	40%
More than 10 years	50%

How is Depreciation Calculated in Car Insurance?

According to the Insurance Regulatory and Development Authority of India (IRDAI), the rate of depreciation in car insurance is calculated:

Age of Vehicle	% of Depreciation for Determining IDV
Less than 6 months	5%
More than 6 months but less than 1 year	15%
More than 1 year but less than 2 years	20%
More than 2 years but less than 3 years	30%
More than 3 years but less than 4 years	40%
More than 4 years but less than 5 years	50%
More than 5 years but less than 6 years	55%
More than 6 years	Decided mutually by the insured and the insurer

Role of Zero Depreciation in Car Insurance During Claim Settlement

During claim settlement, zero dep insurance plays a crucial role by ensuring that you receive almost 100% of the claim amount for the repair in case of accidental damage. Let us consider the following example to understand the role of zero depreciation add-on in car insurance. Let us assume that your 2-year-old car incurs damage due to a collision and requires the replacement of some parts of your vehicle. The estimate received from the garage is ₹50,000.

If you have our comprehensive car insurance but without the zero depreciation add-on cover, this is the depreciation rate applied:

Description	Repair Cost	Depreciation Rate	Deductions
Replacement of Plastic Parts	₹10,000	50%	₹5,000
Repair of Metal Parts	₹40,000	20%	₹8,000

Benefits of Zero Depreciation Car Insurance

Full Claim Settlement

Our nil depreciation cover ensures that you receive almost 100% of the claim amount without the deductions for depreciation. This means that you receive the total cost of the repair or replacement, providing better coverage and cost-efficiency.

Ideal for New and Luxury Cars

Our add-on feature is particularly beneficial for those who own a new, expensive or luxury car. Since the cost of replacement or repair of such cars is higher, with zero depreciation cover, you can be assured that the costs are fully covered.

Minimises Out-of Pocket Expenses

With our nil depreciation car insurance, you can significantly reduce the amount you pay to cover the difference between the repair costs and the claim amount. As you do not have to bear the depreciation costs, you receive adequate coverage and make the best out of your car insurance.

Enhanced Resale Value

Your car insurance and the add-ons maintained can testify to your car’s ideal maintenance and good condition. Knowing that your car is well protected can, therefore, enhance its resale value.

Peace of Mind

With our add-on cover, you can be assured of complete peace of mind. Knowing that IndusInd General Insurance offers the best financial protection in case of any mishap or accident, you can enjoy any ride with peace of mind.

Zero Depreciation in Car Insurance: Inclusions & Exclusions

What's Covered?

Damages Caused by Natural or Man-Made Calamities: Since this is an add-on cover, the inclusions of your base policy are applied. Thus, damages caused by natural or man-made calamities, such as floods, earthquakes, inundation, vandalism, etc., will be covered under the zero depreciation cover as well.

Damages Caused by Road Accidents: Our nil depreciation add-on covers damages incurred in collisions or accidents. It also covers damages caused to car parts, such as fibreglass, plastic or metallic parts.

Damages Caused During Transit: If your car incurs damage during transit of your car from one location to another, the expenses for the same will be covered under this add-on cover.

What's Not Covered?

Vehicle Not Being Used in Accordance to its Intended Use: If your car is not being used for its intended purpose, for example, a private car being used as a commercial vehicle, then your claim will be invalid.

Driving Under the Influence: If you are found to be driving under the influence of alcohol or any other substance during the incident, then the claim will be rejected.

Invalid Vehicle-Related Documents: If you are driving without a valid driving licence, PUC or registration certificate at the time of the incident, your claim is void.

Mechanical Breakdown: Our nil depreciation cover does not cover the repair of damages caused by mechanical breakdowns.

Expired Policy: Claims raised against an expired car insurance policy will be rejected. Thus, ensure that you renew your policy on time to benefit from the policy’s coverage.

Delayed Claim: You must inform us about the accident within 24 hours and initiate the claim online or by calling our helpline number (+91 22 48903009) as soon as possible. Failure to do so will result in rejection of the claim; unless there was a valid reason for the delay.

Damages to Excluded Car Parts: We do not cover the cost of repairing or replacing certain damaged car parts, including the engine, battery, tyre, glass and accessories.

Disclaimer: Please check the official policy documents for detailed information about inclusions and exclusions under your plan.

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Who Should Opt for Zero Depreciation Car Insurance?

Zero depreciation car insurance is ideal for a specific group of car owners who seek comprehensive coverage and overall financial protection. Buying our nil depreciation car insurance can prove to be beneficial to:

Owners of new vehicles should strongly consider our nil depreciation cover. New cars depreciate quickly, and having this cover ensures that the car's value is protected.

For owners of luxury and high-end cars, the repair or replacement costs can be significantly higher. Our nil depreciation cover provides the necessary financial protection to ensure that high-value parts are fully covered, minimising out-of-pocket expenses.

Drivers who frequently use their vehicle for daily commutes or those who have recently started driving can rely on our nil depreciation insurance. In such cases, the risk of accidents or damage is higher, making our nil depreciation cover essential for financial security.

People living in high-risk or accident-prone zones are more likely to incur unavoidable damages to their cars. In such cases, our add-on can benefit by providing full coverage and maximum financial protection.

If you wish to minimise the smallest risks and worry about small bumps and dents on your car, this add-on can help secure maximum coverage.

Zero Depreciation Insurance vs Comprehensive Insurance Coverage

Parameters	Zero Depreciation Insurance	Comprehensive Insurance
Coverage	Covers full repair/replacement costs without depreciation deductions.	Covers damages, but depreciation is deducted from claim amounts.
Claim Settlement	Depreciation does not affect the claim settlement, and full compensation is given to the insured.	The claim amount is received after a standard deduction of depreciation.
Premiums	The premiums are higher as this is an add-on feature that provides enhanced coverage.	Lower premiums when bought without any add-ons.
Claim Settlement Frequency	With our add-on, you can claim your insurance twice in a policy year.	Does not limit the maximum number of claims. However, the claim amount should be within the sum insured.
Financial Security	The repairing costs of fibre, glass, rubber, and plastic parts are borne by the insurer without any depreciation deduction.	Provides broad coverage but considers deductions for depreciation, which must be borne by the insured.

How Much Does a Zero Depreciation Car Insurance Policy Cost?

Age of the Car

Since the age of your car also increases the depreciated value of certain parts, it is a major factor governing the insurance policy cost. Thus, the older the car, the higher the premium.

Model of the Car

The type of car is also one of the most important factors in determining the cost of car insurance. If you own a luxury car, the insurance cost will be higher as the repair or replacement costs of damaged parts will be higher than for a hatchback or SUV. Thus, the make and model of your car are considered while determining the cost.

Your Location

Your car insurance costs change with different geographical locations. For instance, if you live in a disaster-prone or humid area, the chances of catching rust or damage to parts of your vehicle are high. In such cases, the insurance cost will be higher than usual.

Factors to Consider Before Opting for Zero Depreciation Cover

Consider the Age of Your Car

Our car insurance nil depreciation cover is applicable to cars under the age limit of 3 years. So, in other words, only new cars are eligible for 0 depreciation car insurance.

Insurance Cost

As compared to a regular car insurance policy, zero depreciation car insurance will be slightly more expensive in terms of premium. While the slight increase in the premium offers significant benefits when making an insurance claim, it is still important to consider the increase before buying the add-on.

Annual Claim Limit

Under our nil depreciation cover, you can make only two claims in a policy year. This is to prevent customers from making claims about every small dent in their car. Thus, ensure that this fits your coverage requirements and that you are aware of the limit set before opting for it.

Terms and Conditions

We clearly state the terms and conditions applicable to the insurance policy. It is important to be thorough, as violations of these terms can result in claim rejections.

How to Buy/Renew Zero Depreciation Car Insurance?

Steps to Buy Zero Dep:

Go to top of page

Next, you need to add your details, such as your registration number, mobile number and email ID.

Enter the make and model of your vehicle and select the type of plan.

Next, click on “Buy Now” then you will receive a quote based on your input.

Verify the quote and select the add-on “nil depreciation” or “zero depreciation.” Confirm & Pay!

Steps to Renew Zero Dep:

Go to top of page

Go to the “Renewal” tab from the main menu and click “Renew Car Insurance”.

Enter your existing policy details and vehicle details.

Opt for the add-on “nil depreciation” or “zero depreciation.”

Verify the details and complete the payment using your preferred mode.

Key Takeaways

The advantages of zero depreciation car insurance make it a valuable addition to your policy coverage. It provides enhanced financial protection by reducing the liability of bearing the extra cost due to depreciation deductions.

With IndusInd General Insurance, you can swiftly buy or renew comprehensive car insurance or standalone own-damage insurance with the nil depreciation cover and benefit from the enhanced coverage.

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Frequently Asked Questions (FAQs)

Can I claim zero depreciation if my car policy is lapsed?

If your car insurance policy is lapsed, you cannot claim zero depreciation or any other coverage under that policy. Claims raised against an expired or lapsed car insurance policy will be rejected. It is essential to renew the policy on time to ensure continuous coverage and to take advantage of benefits like zero depreciation.

What are the benefits of buying car insurance with zero depreciation online?

There are several benefits of purchasing a car insurance policy with zero depreciation online. Some of them are listed below: Instant Policy Issuance: When you buy a car insurance policy online, you do not have to wait for the policy. Within minutes of payment, you will get the policy document in your email inbox. Minimal Paperwork: Unlike buying a car insurance policy offline, where you have to present extensive documentation, the online process allows you to buy a policy with minimal paperwork. 24/7 Customer Support: Another benefit of purchasing a car insurance policy online is 24&7 customer support. If you get stuck in a process, you can reach out to our customer support team, which will assist you with the process. Discounts and Deals: Lastly, while purchasing a car insurance policy online, you will benefit from various discounts and deals offered by the insurance provider.

What are the documents required to claim car insurance with zero depreciation?

At the time of making a car insurance claim with zero depreciation cover, you need to present the following list of documents. Duly signed claim form. Copy of driving licence Original policy documents Repair estimate and bills from the garage Any additional documents required by the insurance provider.

Is nil depreciation and zero depreciation the same?

Nil depreciation and zero depreciation in car insurance refer to the same concept. Both terms refer to an add-on cover that allows policyholders to claim the full cost of repairing or replacing damaged car parts without any deduction for depreciation. This means the insurer pays the entire cost of parts, ignoring the age-related depreciation value that is usually deducted in standard policies.

Are there factors that affect car insurance with zero depreciation premiums?

Yes, several key factors affect the premium of car insurance policies with zero depreciation cover: Age of the Vehicle: Newer cars typically attract higher zero-depreciation premiums because they are more likely to require expensive repairs. As the car ages, the premium typically decreases. Zero depreciation covers are often available for cars up to five years old. Make and Model: Luxury or high-end cars have higher premiums due to pricier replacement parts and repair costs compared to standard or mass-produced vehicles. Vehicle’s Cubic Capacity: Cars with larger engine sizes often have higher premiums because of increased maintenance and part replacement costs. Location: Insured vehicles in urban or accident-prone areas face higher premiums due to elevated risks of theft, vandalism, or accidents compared to rural locations.

What is IDV in car insurance?

Insured Declared Value (IDV) in car insurance is the maximum amount an insurer will pay if your car is stolen or damaged beyond repair. It represents your car’s current market value after factoring in depreciation based on the age, condition, and make of the vehicle. IDV is a key factor in determining your insurance premium; the higher the IDV, the higher the premium, but it also means better coverage in the event of a total loss. Choosing the right IDV is important because it affects both the cost of your policy and the claim amount you receive.

What should I do if my car insurance with a zero depreciation claim gets rejected?

If your zero depreciation car insurance claim gets rejected, here are simple steps to follow: Read the rejection letter carefully to know why your claim was denied. Check your insurance policy details to see if the reason aligns with the coverage and exclusions. Contact your insurance company or claim adjuster to obtain clarification and inquire about the possibility of providing additional information. Collect supporting documents like repair bills, photos, police reports, or witness statements that back your claim. Write a formal appeal letter mentioning why you think the claim should be accepted, attaching all relevant documents. If the appeal is unsuccessful, cons