Zero Depreciation Car Insurance Explained
Updated On Oct 14, 2023
Want to understand basics of zero depreciation car insurance?
Zero Depreciation car insurance refers to comprehensive car insurance or a standalone own damage car insurance in which a zero depreciation add-on has been included. An add on refers to additional coverage in an insurance policy which can be used to strengthen the policy, and can be purchased at an additional premium. Car Insurance Add ons can be used to tailor insurance policies to your specific needs and to give you additional coverage in case of undue hardship, often saving you money at the time of claims. Zero Depreciation is one such add on.
What is Zero Depreciation Cover?
Over time, the value of different car parts depreciates. That is, their market value reduces due to wear and tear. Insurance companies calculate this depreciation based on the age and usage of your car and therefore, at the time of raising a claim, they will compensate you only for the depreciated value and not the original cost of the car parts that are to be replaced. Thus it leads to a loss of money for you as the policyholder. Zero Depreciation add on prevents this. With this add on, no depreciation of car parts is calculated and you would be compensated for the original market value of your car parts at the time of raising a claim, rather than the depreciated market value as would otherwise be calculated by the car insurance company.
What are the Benefits of Zero Depreciation Add On Cover?
There are numerous benefits of this add on cover. Some of them are as follows:
- Saves Money: Without a zero depreciation add on cover, in case of a claim settlement, the insurance company would not compensate you for the depreciated amount of the car parts in question. However, when you opt for a zero depreciation add on the insurance company would pay the full amount of the car part including depreciation, and you would save considerable amounts of money.
- Peace of Mind: Knowing that the difference between the total cost of repair and the depreciated value of the car parts would be bridged by the insurance company itself, gives you considerable peace of mind. This can be of utmost importance as you will then be able to enjoy your vehicle feeling secure and protected.
Who Should Go for Zero Depreciation?
Zero Depreciation is extremely useful for all car owners. It is especially recommended for the following:
- If your car is new
- If you have a luxury car
- If you are an inexperienced or new driver
- If your car has expensive spare parts
- If you live in an area that is accident-prone
Zero Depreciation car insurance is therefore extremely advisable to purchase. At a slightly increased premium you will be able to save large amounts of money and also get peace of mind, and in case of claims, your insurance company will compensate you for the total amount of the car parts and not just the depreciated value.
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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.