Zero depreciation car insurance, also called bumper-to-bumper coverage or nil depreciation insurance, is an add-on to your regular comprehensive auto insurance policy. With zero depreciation coverage, you can make a claim for the full cost of repairs or replacement without the insurance company deducting any depreciation on parts.
This helps significantly reduce your out-of-pocket expenses when your car is damaged, providing you with peace of mind and financial security in unforeseen circumstances.
With a zero depreciation policy, you can rest assured that your insurance coverage will cover a substantial portion, if not all, of the repair or replacement costs without factoring in the depreciation value of your vehicle.
Zero Depreciation Coverage
Zero depreciation car insurance makes the most sense for:
- Owners of new or luxury vehicles where parts tend to be more expensive
- Drivers in accident-prone areas or congested cities
- Young and novice drivers are at higher risk of accidents.
- Cars with higher-end accessories and features
- Anyone wanting extra protection from large out-of-pocket repair bills
Benefits
Opting for nil depreciation add-on coverage provides many advantages:
- Saves money by eliminating depreciation deductions on claims
- Receives full compensation for repair/replacement costs
- Applies to cars less than 5 years old
- Typically can make 2 claims during the policy period
- Only marginally increases comprehensive insurance premium
Zero Depreciation vs Regular Comprehensive Insurance
Zero depreciation differs from basic comprehensive insurance in a few key ways:
- Higher premiums but more coverage
- No depreciation applied on claims payouts
- Covers more of repair/replacement costs
- Insures newer vehicles, usually under 5 years old
- Out-of-pocket expenses significantly reduced
Factors
The premium for zero depreciation depends on these main criteria:
- Vehicle registration location and zone
- Insured Declared Value (IDV) based on car’s current market price
- Engine cubic capacity and fuel type
- Base comprehensive policy coverage inclusions
- Policyholder’s age and driving experience
- Claims history and No Claim Bonus
Zero Depreciation Claims
The number of zero depreciation and non-zero depreciation claims allowed differs by insurer:
- Bajaj Allianz, Chola MS, Zuno – 2 zero dep claims
- Future Generali, Go Digit – 1 or 2 zero dep claims
- Most insurers like ICICI Lombard, TATA AIG – Unlimited claims
So, to ensure you’re adequately protected, it’s wise to compare insurance providers and their zero depreciation policies. By doing so, you can find the policy that best aligns with your specific needs and offers comprehensive coverage without factoring in depreciation.
