Zero Depreciation car insurance

Zero Depreciation car insurance vs comprehensive car insurance

Who Should Opt For A Zero Depreciation Car Insurance Add-on Cover?

For those who have recently bought a car or own a relatively new one, a zero-depreciation add-on is a prudent choice. Here’s why this coverage could benefit you:

1. Costly Spare Parts: If your car has expensive spare parts, their high depreciation can result in hefty out-of-pocket expenses. A zero-depreciation policy eliminates this burden by covering the full repair cost.

2. For New Drivers: Inexperienced drivers are more likely to face accidents, resulting in frequent repairs or part replacements. A zero-depreciation insurance policy can help you recover the full repair cost, saving you from unexpected financial strain.

3. Driving in Risky Areas: If you often drive in accident-prone regions, the likelihood of damage and repair costs increases. Investing in zero dep insurance ensures you won’t bear the brunt of such expenses from your pocket.

What's covered/not covered under Zero Depreciation Add-on Cover

Covered under a Zero Depreciation Add-on Cover

The Zero Depreciation Add-on provides enhanced protection by covering the full cost of replacing damaged parts without deducting depreciation.

●      Plastic, rubber, and fibre parts

Full claim settlement on parts like bumpers, headlights, and mirrors.

●      Metal parts

Complete coverage for metal body parts and components.

●      Electrical and mechanical parts

Accident‑related damage to electrical/mechanical parts is covered, but functional breakdowns or failures not caused by accident are excluded.

●      Accidental damages

Repairs and replacements following accidents are fully covered.

Not Covered under a Zero Depreciation Add-on Cover

While Zero Dep Add-on Cover provides extensive protection by eliminating depreciation deductions, it does not offer blanket coverage for all types of damages or situations. Here’s a list of exclusions typically not covered under this add-on:

• Mechanical or Electrical Failures

  Any damage caused by mechanical or electrical breakdowns is not included.

• General Wear and Tear

  Regular wear and tear of the car, including tyres, batteries, and consumables like engine oil, is excluded unless specified under another add-on.

• Engine Damage Due to Waterlogging

  Damage to the engine caused by water ingress or oil leakage is not covered unless you have a separate engine protect add-on.

• Illegal Activities

  Claims arising due to accidents or damages caused while the car was used for illegal purposes are excluded.

• Drunken Driving or Other Violations

  Damages occurring while the driver was under the influence of alcohol or drugs or driving without a valid licence are not covered.

• Consequential Damages

  Damages that occur indirectly due to an earlier issue (e.g., driving a car after an accident causing further damage) are excluded.

• Outside Geographical Limits

  Any damage occurring outside the territorial jurisdiction defined in the policy is not covered.

• Commercial Use

  If a private car insured under this cover is used for commercial purposes (e.g., taxi or goods transportation), claims may not be entertained.

• Loss or Damage Due to War, Terrorism, or Nuclear Risks

  Any damage caused by war, nuclear activities, or acts of terrorism is not covered.

• Driving in a Reckless Manner

  Damages arising from reckless or negligent driving are excluded from coverage.

Depreciation rates in car insurance

Depreciation in car insurance reduces the claim amount as your vehicle ages, making it essential to understand how rates impact your coverage and out-of-pocket costs. To ensure transparency, IRDAI has established specific depreciation rates for car parts to calculate claims under standard car insurance policies. Here’s a quick breakdown:

Rate of Depreciation for All Parts Approved by IRDAI

Rate of Depreciation in Vehicles: Metallic Parts

How Does Zero Depreciation Car Insurance Work?

Zero Depreciation Car Insurance covers the full cost of repairing or replacing parts without deducting depreciation. Usually, we reduce claim payouts by factoring in the wear and tear value of parts. With Zurich Kotak’s Zero Depreciation cover, you only pay the standard deductible, while the insurer covers the rest.

For Example:

●        Without zero depreciation: Repair cost Rs. 8,000, 40% depreciation + Rs. 1,200 deductible, you pay Rs. 4,400.

●        With zero depreciation: Repair cost Rs. 8,000, no depreciation deduction, only Rs. 1,200 deductible, you pay Rs. 1,200.

This add-on maximises your claim payout and reduces your out-of-pocket repair expenses. This cover is ideal for new and luxury cars, providing protection usually up to 5 years (subject to policy terms).

How is Zero Depreciation Car Insurance Premium Determined?

The premium for zero dep cover depends on several factors:

1. Car Age & Model: Newer or luxury cars with costly parts attract higher premiums.

2. Insured Declared Value (IDV): Higher car value means a higher premium.

3. Location: Risky or urban areas with heavy traffic can increase premiums.

4. Driver Profile: Inexperienced drivers may face slightly higher costs.

5. Add-ons: Extra covers like roadside assistance can add to the premium.

These factors help insurers like Zurich Kotak General Insurance determine a fair premium, ensuring comprehensive coverage suited to your car’s needs.