Understanding The Difference Between Third Party Cover and Zero Depreciation Cover In Car Insurance

In this world where everything is so uncertain, it is important to have car insurance as a car is an asset which is loved by every owner in this whole world. Even a small dent causes stress and sadness to the owner, so in this case owning a valid car insurance will make the car owner certain about their car’s protection. Car insurance policy provides three types of plan to the car owners which are: third party car insurance, comprehensive car insurances and private own damage car insurance as the insurance companies understand the car owners’ emotional and safety requirements. Along with three types of car insurance plans, insurance companies also provide add ons to their plan so that the car owners can expand their coverage for the unforeseen events in future. One of the most popular car insurance policy add-ons also includes Zero depreciation cover. This is a very popular car insurance add on amongst the car owners. 

What is Third Party Car Insurance?

According to the Motor Vehicle Act, Third party insurance is also known as “Act-Only” insurance in the market. This insurance is a legal requirement for all cars. It is called third party insurance because it provides coverage for the damages caused to vehicles which is third party, third party’s personal property and third party's physical injury. This policy is not made for the coverage of the insurer, but the third party who accidentally gets affected by the insurer.

How Does Third-Party Insurance Work?

The insurer offers to the third party to pay for any damages caused due to an accident between the policyholder and the third party. When the policyholder has the mandatory third party insurance, insurers paying for the policyholder will reduce the burden from the policyholder's back financially. In case the policy holder faces any accident, then the insurer or policyholder should inform the insurance company about it to make the claim easy. The insurance company will hire a surveyor to find all the damages and repairs that need to be done on the car. The Surveyor will verify all the damages and tell the estimated amount for repairing the car. Once the surveyor has completed the verification process, the claim will be settled by the insurer.

What is Zero Depreciation Car Insurance?

Zero depreciation car insurance is also known as “NIL” depreciation. You should opt for zero depreciation car insurance as it is an add-on on your complete car insurance plan and your stand-alone damage policy. If you have this add-on it will save you a lot of money, saving you from burning a hole in your pocket at the time of any unforeseen event.

In case you face any accident, this car insurance plan will provide you entire coverage for replacing car parts or repair any damages caused in the accident by claiming it. Claim amount raised by the insurer will not be reduced by the final value of damaged parts of the car because it is part of the car insurance plan which is why taking this add-on in your car insurance plan should be a must for all car owners. The best part about having this add-on is that if your car is old, even then the depreciation rate with zero depreciation coverage will be 0%. You get this add on with your own damage car insurance or with comprehensive car insurance.

Comparison between Third party vs Zero Dep Car Insurance

Below we will be comparing the benefits your car will be having with just third party car insurance versus zero depreciation car insurance:

Depreciation Cost Under Third Party Policy vs Zero Depreciation Cover

As the age of the car grows, the value of the car also decreases with time. Since, its market value has decreased, its claim amount will also decrease. This is the meaning of depreciation in ;cost. In simple words, decreasing the claim amount due to the growing age of cars. We have mentioned below the timeline, the depreciation cost under third-party and the depreciation cost under Zero Depreciation add-on: