What is the process of claiming zero depreciation car insurance policy?
Zero depreciation car insurance is a policy that provides a cover amount without deducting the depreciation amount. It is also known as bumper to bumper car insurance. It eliminates the depreciation factor from the insurance coverage and offers complete coverage.
Zero depreciation insurance offers 100% coverage for all parts of the insured car, including fibre, metal, and rubber parts, without deducting depreciation. However, this policy does not cover the damage caused to car battery due to water ingression or oil leakage. It also excludes mechanical breakdown, consumables, and oil change from the coverage. Zero depreciation will cost you between 15-20% of the standard premium. It has a cap on the number of claims you can put in a year.
What factors must be kept in mind while buying zero depreciation car insurance?
- The first factor is the age of the car. A zero-depreciation car insurance policy is applicable to cars that are not more than 3 years old.
- A zero-dep car insurance policy will cost you slightly more in terms of premiums as compared to the regular car insurance policies. If you own a car that is more than 3 years old, then it is suggested to skip buying a zero-depreciation policy. Only if you are living in a high-risk area or you own a luxury car, then a zero-depreciation policy makes a good choice.
- A zero dep car insurance policy comes with a limit on the number of claims you can put in a year. Hence, you must be careful about the claims you make and consider avoiding claims for small dents.
What is covered under the zero depreciation car insurance plans?
- Financial liability in case an individual suffers physical hurt, wounds, or loses life by your car.
- Financial liability in case someone’s property is damaged by your car.
- Damages suffered by the insured car due to man-made events like riots, fire, malicious acts, etc.
- Damages suffered by the insured car due to natural calamities like earthquakes, landslides, storms, floods, etc.
- Damage caused to the insured car while transporting it from one location to another.
- Depreciation suffered by the parts of the insured car.
Why is zero depreciation car insurance costlier?
A zero dep car insurance policy will cost you more than a standard car insurance policy, which is approximately 15% additional on your comprehensive car insurance policy. By paying a 15% extra premium, you can get overall protection for your car against damage costs and save during claims.
Typically, in standard car insurance, the cover for damage caused to the car is paid based on its depreciation value. The depreciation rate set by IRDAI is as following:
- 50% on Rubber, Nylon, and Plastic Parts, and Batteries
- 30% on Fiber Glass Components
- 5% on Wooden Parts in the first year, 10% in the second year, and so on.
The role of zero-depreciation car insurance policy is to provide you coverage eliminating the depreciation value, which eventually increases the coverage amount.