Posted by Policyboss.com


In the event your car gets involved in an accident, the costs towards repair and liability towards damages to third party vehicle could be significant. If you have a Comprehensive Motor Insurance, it takes care of most of your expenses in the event of an accident. But it’s a comprehensive insurance you say. So why only “most” expenses and not “all” expenses? Insurers factor in depreciation while settling your car insurance claim. This varies from one insurer to another from around 15 – 20% in the first year to a higher percentage in the subsequent years. So how does one secure oneself against depreciation and ensure out-of-pocket expenses are minimized in case of a car accident? This is where a Zero Depreciation Cover comes in. As the term implies, Zero Depreciation Cover offers comprehensive coverage without taking depreciation into account. Therefore, in the event of a collision, the insurer will cover the entire cost if you have taken up a Zero Depreciation Cover.

I have a Comprehensive Motor Insurance. Do I still need a Zero Depreciation Cover? A Comprehensive Motor Insurance policy, like the term suggests, is comprehensive. But it does not take into account depreciation to your vehicle. Therefore, opting for a Zero Depreciation plan protects you from depreciation. While you will end up paying a higher amount as premium, it will provide you the much needed peace of mind in the event of an accident.

Why go for Depreciation Cover? As discussed briefly above, depreciation cover secures you against depreciation cost excluded by insurers while settling your car insurance claim. Plastic, fibre, glass, and metal parts depreciate over time. Hence attracting a depreciation to the value of the car.

Who should buy a zero depreciation cover? Now that we have discussed the need for depreciation cover, let us delve deeper into who should go for a Zero Depreciation cover:

i. People who own a premium segment car, or a car that is valued over 10 lakhs
ii. New drivers or relatively inexperienced drivers are more likely to dent their vehicle. Hence it is recommended to go for Zero Depreciation cover in such cases.
iii. People driving long distance expose themselves to risk of accident and are generally at a higher risk.
iv. Cars whose spares, servicing, and repair is considered high and are generally more expensive

What are the Limitations of a Zero Depreciation Cover:
A Zero Depreciation Cover has a few limitations: i. Limits the number of claims you can make annually
ii. Applicable only to new cars – age limit of 3 - 5 years
iii. Premium load is higher for vehicles above 1500 cc iv. Not covered for commercial vehicles