Every car owner needs insurance to protect against unexpected damage and financial loss. Among so many options, the most sought-after one is a depreciation car insurance policy that guarantees maximum savings and coverage.
This blog emphasises key considerations for choosing the perfect car insurance policy, with special reference to zero depreciation benefits.
Types of Car Insurance Policies
Car insurance provides financial security against damages, theft, accidents, or natural disasters. It also covers third-party liabilities, making it a legal requirement. The three different types of Car insurance policies are:
1. Third-party Insurance
Covers damages caused to others but does not protect your vehicle.
2. Comprehensive Insurance
Covers your car’s damages and third-party liabilities.
3. Own damage Insurance
Protects your vehicle but excludes third-party liabilities.
For better protection, comprehensive policies can be enhanced with add-ons, such as zero depreciation cover.
What is Zero Depreciation Car Insurance?
A zero depreciation car insurance add-on ensures no depreciation is deducted from the claim amount. This means you receive the actual cost of repair or replacement for damaged parts, thereby decreasing out-of-pocket expenses a lot.
5 Key Benefits of Zero Depreciation Car Insurance Cover
A zero depreciation cover ensures your vehicle retains its full insured value, offering peace of mind and substantial savings during claim settlements:
1. Higher Claim Amount
Provides the cost of repair, including depreciation charges.
2. Cost Savings
Save out-of-pocket expenses associated with car parts replacement that are damaged.
3. Extensive Coverage
Fibre, rubber, and plastic parts generally have high depreciation rates and are also covered by this policy.
4. Preserves Resale Value
Protects your vehicle’s resale value as every dollar of its repair cost will be covered entirely.
5. Peace of Mind
It guarantees finances in distressing situations, such as accidents.
Factors to Consider When Choosing a Car Insurance Policy with Zero Depreciation Cover
Key things to look at when choosing a zero depreciation cover include:
1. Age of the Vehicle
Zero depreciation is available for cars up to five years old. The older the vehicle, the more coverage it may require.
2. Premium Costs
Adding zero depreciation increases your premium by 15-20%. However, the benefits often outweigh the additional cost.
3. Number of Claims
There is usually a two-per-policy period limit on zero depreciation claims. Please check with your insurer.
4. Policy Exclusions
Items like tyres, batteries, and engine parts may need to be fully covered. Read the policy terms carefully.
5. Ease of Purchase
Choose insurers that allow online purchase and renewal, saving time and hassle.
Difference Between Comprehensive Car Insurance Policy With and Without Zero Depreciation Cover
Understanding the distinction between a comprehensive car insurance policy with and without zero depreciation cover is crucial for making a firm decision about protecting your vehicle:
| Aspect | With Zero Depreciation Cover | Without Zero Depreciation Cover |
| Premium | Higher by ~15% | Lower |
| Depreciation Costs | Covered by insurer | Paid by policyholder |
| Claim Settlement | Higher claim amount | Reduced claim amount |
| Out-of-Pocket Expenses | Minimal or none | Higher |
| Long-term Savings | Significant savings on repair costs | Limited savings |
How Depreciation Impacts Car Insurance Policy?
Depreciation is the reduction in your car’s value over time due to wear and tear. This directly affects your claim amount under a standard comprehensive policy:
Depreciation Rates for IDV Calculation
| Age of Your Car | Depreciation for IDV |
| Up to 6 months | 5% |
| 6 months to 1 year | 15% |
| 1 to 2 years | 20% |
| 2 to 3 years | 30% |
| 3 to 4 years | 40% |
| 4 to 5 years | 50% |
| 5 years and above | Negotiable |
Depreciation Chart for Car Parts
| Age of Vehicle | Depreciation (%) |
| Not exceeding 6 months | NIL |
| 6 months to 1 year | 5% |
| 1 to 2 years | 10% |
| 2 to 3 years | 15% |
| 3 to 4 years | 25% |
| 4 to 5 years | 35% |
| 5 to 10 years | 40% |
| Over 10 years | 50% |
4 Reasons Why to Opt for a Car Insurance Policy with Zero Depreciation Add-On?
A zero depreciation add-on ensures your car insurance provides maximum coverage, offering you greater financial protection:
1. Enhanced Coverage
Protects against depreciation costs for car parts like rubber, plastic, and metal.
2. Affordable Premiums
Costs slightly more but ensures long-term savings.
3. Quick Claim Process
No depreciation calculations make the settlement faster.
4. Better Financial Planning
Reduces uncertainty about repair costs.
5 Exclusions Under Car Insurance Policy with Zero Depreciation Cover
Zero depreciation cover offers extensive protection, but it’s essential to understand what it doesn’t include to avoid surprises during claims:
- Claims were filed after 30 days of the incident.
- Wear and tear on parts like tyres and batteries.
- Repairs not approved under the policy terms.
- Damage is covered under another policy type.
- Expired insurance policy.
5 Tips Before Choosing the Best Car Insurance
Selecting the right policy during car insurance renewal or buying for the first time may seem challenging, but with some savvy tips, you can find a policy that fits your needs and budget.
1. Compare Premiums
Check online for policies that balance coverage and cost.
2. Evaluate Add-Ons
Assess the value of add-ons like zero depreciation for your needs.
3. Check the Claim Settlement Ratio
Choose an insurer with a high claim approval rate.
4. Customise IDV
Opt for flexible IDV to maximise benefits.
5. Read the Fine Print
Review the exclusions and limitations carefully before making a purchase.
Choosing the right car insurance policy with a zero depreciation car insurance add-on is a wise decision. It provides extensive coverage, minimises out-of-pocket expenses, and preserves your car’s value. Invest in this policy for financial security and peace of mind on the road.
