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Zero depreciation cover is also known as zero depreciation policy. This gives complete coverage without any type of depreciation. In clear terms, this statement means that if your car faces a collision the whole cost of the repair will be borne by the company.

What is Depreciation?

In simple terms, depreciation is defined as the decrease in the value of the asset with passing time. For example, a new car is more expensive than buying a second-hand car. This is depreciation. Similarly for the material such as plastic, glass, metal, etc that makes a car depreciate with time. Every product depreciates at a different rate with time so the cost of the vehicle decreases. So depreciation changes the value of the asset in the market. Even you should know that a brand new car which is inside a showroom will be more price than a car which just came out of showroom minutes ago. So, depreciation starts at that very moment.

Why is Zero Depreciation Cover Better Than a Standard Insurance Policy?

Comparing both the aspects that are zero depreciation car insurance cover with a normal standard insurance policy than zero depreciation cover is a better aspect because of the following reasons:-

  1. There is a full claim settlement that is full value coverage is given and depreciation doesn't make any difference whereas for the normal policy claim amount depends on the present cost of the vehicle. In this case, depreciation plays a great role.
  2. As the zero depreciation provides full coverage than premium is high because of the additional benefit it gives whereas for the standard policy the premium is comparatively low.
  3. All the cost of repairing and plastic fiber is born by the insurer in the zero depreciation policy. For the normal standard policy, the cost of repairing and the fiber is paid by the insured, as its not a part of the policy.
  4. Talking about the age of the car, usually, new cars are taken for the zero depreciation cover whereas for the normal policy car which is more than three years old can opt for this one.
  5. Opting for a standard insurance policy is great in the case of vehicles where you know expenses are less for the repair but if you have vehicles that are huge in cost and there spare parts or repair will be very expensive than without a second thought you should go for zero depreciation policy. After the entire repair cost will be born by you in the case of normal policy. So going for zero depreciation is advisable in case of such vehicles.

Before Opting For Zero Depreciation Car Insurance Cover, Factors To Be Kept in Mind

Taking a zero depreciation insurance cover for your car, just look at the points given below and then make the depreciation cover

Cost- The cost of a zero depreciation car insurance policy is more than compared to the normal policy. The reason behind this is that this cover does not consider depreciation and your vehicle is covered without any concern. This is not the same as standard policy. So a little higher premium is present in this scenario.

Several claims- Usually there is a limit to the number of claims you can make in a year. This is done because the policyholder starts opting for claims even on a single little dent. So keep a check that the number of the claim insurance company offers you. The claims should be according to your convenience. While opting for claims does think that the amount is big. So don’t waste the chance.

The location where you stay- We might not think about this but the location in which we reside plays a great role when you opt for the insurance cover. If you know you belong to an area where traffic is always at peak and people drive in the rash manner so for the vehicle which you have bought from your own hard-earned money, zero depreciation cover is a must. If you stay in a location where you know the chances of an accident are fairly less than you can think of opting for a standard insurance policy.

Available for new cars- Zero depreciation is available for the new vehicles. It is not for old cars. For the viewpoint of the customer, it is not a cost-effective method to pay a high premium on the vehicles which are more than five years old. So it's better to opt for standard policy in case of old vehicles and for the new vehicles, zero depreciation is good as there is no tension in case of an accident.

Zero Depreciation Cover is For Whom?

If you have a brand new car then it is advisable to opt for zero depreciation cover. This is important to keep your vehicle protected from all the threats and damage which can occur in the future. Many people believe that for the ones who are new to driving and have bought a new vehicle for themselves, it is a must for them as they are more prone to accident and they will have more losses. To the more, the experienced driver can even face losses in a large amount as they might not be at fault but because of the other person, they may face an accident. So it is important to opt for zero depreciation cover in case of new vehicles as it is for the safety of it. To the more people who buy expensive cars, they might face an accident which may cost a lot. These special edition cars have very expensive spare parts which may disturb your financial statement. So, opting for zero depreciation cover is great as for the luxury car you don't need to worry much as the company will pay for it. To the more people who are worried about a single little dent or bump which they can face and are conscious of it than zero depreciation car insurance cover is more suitable for them as they will stay safe.

Thus, it is advisable to buy zero depreciation insurance cover for the vehicle which you know is not safe and may cost you a lot later.

Naval Goel is the founder of He is an Associate Member of the Indian Institute of Insurance`, Pune. He has been authorized by IRDA to act as a Principal Officer of Insurance Web Aggregator.
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