Myths About Add-on Cover With Zero Depreciation

Cars, like any other piece of machinery, lose value over time due to wear and tear; this loss of value is referred to as depreciation, and the pace at which it happens is referred to as depreciation rate. With current rates, the value of your automobile will decline by 20% in a year and then grow by 10% over the next few years. This rate has an impact on the car's sale price as well as the cost of insurance. The Insured Declared Value, which is influenced by the insurance rate, is used to determine car insurance claim limitations. You can avoid the depreciation rate influencing your IDV with the Zero Depreciation auto insurance cover. Before you buy this cover, read this post to learn about the typical misunderstandings about it.

Common Errors About the Zero Depreciation Add-on

By not taking into consideration the car's depreciation rate at the time the claim is lodged, the zero depreciation cover delivers greater claim amounts. This insurance isn't cheap, but it'll save you a lot of money if something goes wrong. This coverage may be purchased for vehicles that are less than five years old. For more information on the depreciation rate of an automobile, go here. The following are important considerations to make when deciding whether or not to purchase a zero depreciation vehicle insurance policy:

1. The Cost of Consumables is Covered

The garage employs a variety of consumable products when fixing an automobile, such as nuts and bolts, oil, and so on. Unless you have a Consumables Add-on, the cost of such things is not covered by a car insurance policy. The Zero Depreciation Cover does not cover such expenses.

2. Deductibles The Expense is Covered

The cost of Deductibles, like the cost of Consumables, is not covered under this plan. As a result, you must vouch for the Compulsory Deductible portion of the policy in the event of a claim. It is a pre-determined nominal sum that the policyholder is responsible for in the event of a claim.

3. One Claim Per Person

The number of times you may claim against this plan within a policy period may be limited. The usual maximum is twice, however, this might change.  For example,  it does not now have such a limit, although this may change in the future. To determine the claim limit under the Zero Depreciation Cover, it's best to read the Policy Wordings at the time of purchase.

4. Old Cars may Easily be Purchased with Zero Depreciation

If you have a 6-year-old automobile and wish to insure it with a Zero Depreciation Add-on, you may have trouble doing so. For automobiles older than five years, most insurers do not provide this add-on.

5. There are no Exceptions

Exclusions apply to the Zero Depreciation Add-on, just as they do to other auto insurance add-ons. It usually does not cover the following characteristics of a car that is insured.

• Damage caused by a vehicle's technical failure
• Wear and tear are inevitable
• Damage caused by an oil spill or water intrusion
• Uninsured items, such as a gas kit or a bi-fuel kit, are damaged.

6. Two-Wheelers are not Permitted

Both vehicles and motorcycles can benefit from the Zero Depreciation add-on. You may pick this add-on protection together with the Comprehensive Plan when purchasing or renewing your vehicle's insurance policy.

Take Away

In general, when you file a claim, a zero depreciation policy will prevent the rate of depreciation from impacting the Insured Declared Value of your automobile. It is a more expensive policy than others, but the returns are guaranteed to be favorably disproportionate in the event of a disaster. Before purchasing this cover, it is important to understand what it does and does not provide. A 0% depreciation cover is available as an add-on to your normal insurance; there are many other beneficial add-ons for your vehicle insurance; click here to learn more about add-ons.

Also read - Why Should You Keep Your Car Insurance Records For So Long?