Difference between Comprehensive car insurance and Zero Depreciation Cover
Updated On Oct 15, 2023
New to car insurance? Read this article to understand the basic difference between comprehensive plans and zero depreciation covers.
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Purchasing a new car is an exciting time for every individual. However, it is a big and important purchase for everyone and hence, we all want to protect our car in the best way possible. Driving and being on the road come with certain inherent risks that are difficult to avoid. However, one way to protect both you and your car is by getting insurance. Car insurance will provide compensation to you in case of a mishap and thereby offer a certain amount of security in case of a crisis. Buying insurance is now extremely simple and can be done entirely online. An added benefit to this method of purchasing car insurance is that it allows you to compare the different car insurance companies, the quotes they offer and their network of cashless garages all with just a few clicks. However, when purchasing insurance online it is important to make an informed decision. Hence, in this article, we will clear up one of the most basic and most commonly asked questions about car insurance, ‘What is the difference between comprehensive car insurance and zero depreciation cover?’.
What is a Comprehensive Plan in Car Insurance?
When purchasing insurance for your car in India there are three basic types to choose from; third party insurance, standalone own damage insurance and comprehensive car insurance. Third party insurance is a mandatory cover for every car driving on Indian roads. It takes care of only third party liabilities including bodily injuries, death and property damage in case of a mishap. If caught without this cover you can be fined Rs 2000 and/or be imprisoned for up to 3 months. Standalone own-damage covers on the other hand are not mandatory but will take care of own-damage costs only in the event of a mishap. This includes several possible scenarios such as cases of theft, vandalism, natural or manmade calamities and of course road accidents. The third type of insurance is the comprehensive insurance plan. As the name suggests, this type of insurance takes care of both own-damage costs and third party liabilities under a single premium. Moreover, it also offers its customers an optional personal accident cover.
What is a Zero Depreciation Cover in Car Insurance?
The zero depreciation cover is an add-on cover,i.e., it cannot be purchased on its own. Add-on covers are additional covers that can be purchased either with a standalone own damage cover or a comprehensive insurance plan. It is not compulsory and comes at an additional cost. The zero depreciation cover negates the depreciation rate of the car at the time of claim settlement ensuring that the claim amount is significantly higher. However, keep in mind, the cover is only available for cars that are less than five years old and can be used only a limited number of times a year.
Depreciation is the term used to explain the natural wear and tear of two-wheelers and cars. It lowers the valuation of the car in the market and hence, is also taken into account when the insurance provider is calculating your premium and claim amount.
The above mentioned points should ensure that you can now easily differentiate between the comprehensive insurance plan and zero depreciation cover which is an add-on.
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.