• Motor insurance encompasses various types, with one of them being car insurance. It acts as an essential financial protection for vehicle owners. It offers coverage against different risks, such as accidents, theft, and natural disasters. An important feature of car insurance that frequently goes unnoticed but can greatly impact a claim is the depreciation shield, especially when considering zero depreciation car insurance.

Let’s delve into the meaning of zero depreciation and examine some of its advantages.

Depreciation in Car Insurance

• Within the realm of motor insurance, depreciation signifies the decrease in a vehicle’s value and its components over time due to wear and tear. When you submit a claim for your car’s damages or repairs, the insurance provider typically takes this depreciation factor into account when determining the claim amount. This implies that you might receive a lower pay-out based on the depreciated value of the damaged components, resulting in out-of-pocket expenses for you.

What is Depreciation Shield in Car Insurance?

• Zero dep car insurance, also referred to as ‘Zero Dep’ insurance, is an add-on coverage feature that eliminates or notably decreases the effect of depreciation when settling claims. In straightforward terms, it guarantees that you obtain the complete cost of repairing or replacing damaged car parts without any deduction for depreciation. Claims are contingent upon the terms and conditions outlined in the motor insurance policy. *

Working Of Zero Depreciation Insurance

• With the depreciation shield in car insurance, the insurance provider covers the total cost of repairs or replacements of damaged parts without considering depreciation. This means you will receive a larger claim amount, ensuring that you do not have to shoulder the depreciated portion of the costs. Claims are subject to terms and conditions as specified in the motor insurance policy. * Since this coverage is an add-on to comprehensive insurance, the policy’s premium may increase. Nonetheless, this additional cost is commonly deemed worthwhile due to the peace of mind and financial security it provides during claim processes.

Difference between Standard Car Insurance and Zero Depreciation Cover

Advantages of Depreciation Shield In Car Insurance
Choosing depreciation shield in car insurance presents numerous benefits for car owners:

Complete Coverage

• Zero depreciation car insurance delivers extensive coverage for your vehicle, guaranteeing that you obtain full compensation for repairs or replacement of damaged components. This guarantees that the operation of your car is not affected, particularly if it is used regularly. *

Lower Out-of-Pocket Expenses

• By eliminating the influence of depreciation, you are not required to pay the depreciated portion of the repair or replacement cost. This results in reduced out-of-pocket expenses during claim settlements. *

Also Read: Is The Depreciation Cost Of EV The Same As Fuel Vehicles?

Conclusion

• Zero depreciation car insurance serves as a beneficial add-on for car owners seeking thorough financial protection. As a policyholder, evaluating your coverage requirements and contemplating the add-on is essential to maintain complete protection and financial security on the road. Ultimately, deciding whether to include a depreciation shield in your policy is a choice that can offer long-term peace of mind and financial stability for your vehicle.

FAQs

How is depreciation calculated on cars?

• Depreciation for cars is determined based on the vehicle’s initial purchase price and age. Generally, a set percentage is deducted annually, following regulations from the Insurance Regulatory and Development Authority of India (IRDAI). For instance, vehicles older than five years may depreciate at a mutually agreed rate between the owner and insurer.

Can I get depreciation cover for a car older than 5 years?

• Yes, depreciation cover for cars over 5 years old is available through Bajaj Allianz General Insurance Company. We provide comprehensive insurance policies that include add-ons like the depreciation shield, which compensates for the depreciation of your vehicle during claims, ensuring that you receive a fair value for repairs or replacements.

Can I change the comprehensive insurance policy to zero depreciation?

• Yes, you have the option to upgrade to zero depreciation cover during the policy renewal or by reaching out to your insurer, subject to conditions and additional premium charges.

Which is better – A comprehensive policy with or without zero depreciation cover?

• A comprehensive policy with zero depreciation is preferable for new cars, offering enhanced coverage. While premiums are lower without zero depreciation, claims are diminished because of depreciation.

Is zero depreciation available for old vehicles as well?

• Typically, zero depreciation is accessible for vehicles up to 5 years old. The availability for older cars depends on the insurer and the condition of the vehicle.

Can I transfer the Zero Depreciation cover to the new owner?

• Zero depreciation coverage is usually not transferable to a new owner. The new owner must obtain their own insurance policy with zero depreciation.

Is depreciation shield worth it for new cars?

• Investing in a depreciation shield, or zero depreciation cover, for new cars is beneficial. It guarantees that during claims, the full repair expenses are paid without deductions for depreciation. This is particularly advantageous during the initial years when a car’s value decreases rapidly, offering substantial financial protection against unforeseen costs.