Zero depreciation add on with your car insurance can be useful in a new car's first year as claim depreciation in India is not only based on the car's age. Under a standard comprehensive policy, rubber, plastic, nylon parts, tyres, tubes, batteries, airbags and paint may face a flat 50% depreciation deduction from day one.
A brand-new car can still leave you with a large repair bill in case a bumper, grille, headlamp or mirror get damaged.
The short answer is this: A zero-dep cover is worth getting in the first year if your car has expensive plastic, fibre or rubber parts, and if you drive in crowded city conditions.
What does a zero depreciation add-on cover?
A zero depreciation cover (also called a Zero-Dep or Bumper-to-Bumper cover) is an add-on that ensures the insurer pays the entire cost of replacing damaged parts in an accident claim, without deducting anything for age-related wear and tear (depreciation). It usually covers depreciation that would normally be applicable on repaired parts.
Your insurer will check if the damage caused is covered, then apply depreciation deduction as per policy terms.
This is why the question is not only, "do I need zero depreciation cover for a new car?"The better question is, "which parts are most likely to be damaged, and what depreciation will apply to those parts?"
| Cover type | Situation | What will you have to pay |
|---|---|---|
| Comprehensive Car Insurance | The insurer applies depreciation deductions on parts as per your policy. | The depreciation amount, plus any other amount payable under the policy terms. |
| Comprehensive Car Insurance with Zero Dep Add-On | The insurer waives depreciation on covered parts | Exclusions if any |
How does a Zero-Depreciation cover work?
A zero-dep add-on covers age-related wear and tear of your car’s parts when you file an accident claim. When your car is repaired after a collision, the insurance company calculates damages based on the original cost of the new parts, rather than the depreciated value.
Here is how a zero-dep claim works
- Situation: Your new car hits a divider and damages the front plastic bumper, a fibreglass headlight, and a steel fender.
- Repair estimate: The garage estimates a repair bill of ₹20,000 for the new parts.
- Without zero-dep cover: Depreciation deductions apply, 50% for the plastic bumper, 30% for the fibreglass headlight, and 10% for the steel fender. You may have to pay up to ₹7000 from your own pocket.
- With zero-dep cover: Since material depreciation is covered by the add-on, your insurance company covers the entire ₹20,000 repair bill. You may only have to pay the compulsory deductible and the cost of any uncovered consumables.
New car depreciation risk
Yes, a brand-new car faces significant depreciation risk during accident claims. Policyholders often expect a 100% payout for a new vehicle, but standard comprehensive policies apply immediate depreciation on replaced parts.
Depreciation during claim settlements falls into two distinct categories:
Material-Based Depreciation
Material depreciation is determined strictly by what the component is made of, regardless of vehicle age. It applies from Day 1 of policy purchase:
- 50% Deduction: Plastic, rubber, nylon, tyres, batteries, and airbags.
- 30% Deduction: Fibreglass components.
- 0% Deduction: Glass components, covered at 100%.
Age-Based Depreciation
Age-based depreciation applies to metal and wooden parts, increasing progressively as the car ages:
- Up to 6 months: 0% deduction on metal parts.
- 6 months to 1 year: 5% deduction on metal parts.
- 1 year to 2 years: 10% deduction on metal parts.
- 2 years to 3 years: 15% deduction on metal parts.
- 3 years to 4 years: 25% deduction on metal parts.
- 4 years to 5 years: 35% deduction on metal parts.
- Exceeding 5 years: 40% to 50% deduction on metal parts.
Even within the first 6 months, when metal parts carry 0% depreciation, an accident claim can still result in a big out-of-pocket expenses. Cars extensively use plastic and composite materials for bumpers, front grilles, sensor housings, and headlight assemblies. Since these parts carry a mandatory 50% material depreciation from Day 1, a car insurance policy without a Zero Depreciation add-on will only cover half the replacement cost.
Do you need the Zero Depreciation add-on for your brand new car?
For a brand-new car in its first year, getting a Zero Depreciation (Zero Dep) add-on is recommended.
Since first-year cars suffer a sharp drop in market value, a single accident can cause a massive out-of-pocket expense without this cover.
If your brand-new car hits a pillar a month after delivery and needs a new plastic bumper and headlight assembly costing ₹15,000:
| Cover | Plastic or rubber depreciation | You pay | Total out-of-pocket loss |
|---|---|---|---|
| Without Zero Dep | 50% | ₹7,500 | ₹7,500 |
| With Zero Dep | 0% | ₹0 | ₹0 |
Confirm exact add-on terms before you pay
Zero depreciation availability, premium, covered parts, claim limits depend on the car insurer, car type, and city. Check a policy at purchase or renewal to understand inclusions and exclusions if you are comparing a dealer quote with an online or agent quote.
How much does a zero depreciation cover cost in India?
Zero depreciation add-on cost varies by insurer, car model, city, time, claim-limit option and policy structure. A Zero-Dep add-on can cost 15% to 20% extra on top of your base Own-Damage (OD) premium. Total out-of-pocket cost may range from ₹1,200 to ₹10,000+ per year, depending on your car's price, engine size and age.
| Car Segment | Estimated Annual Add-On Cost | Typical OD Premium Loading |
|---|---|---|
| Hatchbacks / Entry (e.g., Alto, Swift) | ₹1,000 to ₹2,500 | 10% to 15% of OD Premium |
| Sedans / Compact SUVs (e.g., City, Brezza) | ₹2,500 to ₹5,000 | 12% to 18% of OD Premium |
| Mid-to-Large SUVs (e.g., Harrier, XUV700) | ₹5,000 to ₹9,000 | 15% to 20% of OD Premium |
| Luxury / Import Vehicles (e.g., BMW, Audi) | ₹10,000 to ₹25,000+ | 15% to 25% of OD Premium |
What are the eligibility rules and limits?
Most insurers offer zero depreciation for cars up to 5 years old, and some extend it further depending on the insurer. Car insurers commonly cap zero-dep claims at 1 to 2 claims per policy year, while some offer unlimited-claim variants at a higher premium.
| Rule or limit | What does it mean | What you should check |
|---|---|---|
| Car age eligibility | Most insurers offer zero depreciation up to 5 years of car age. | Whether your insurer offers it beyond 5 years. |
| Claim count | Many insurers cap it at 1 to 2 zero-dep claims per policy year. | The exact number allowed in your policy schedule. |
| Unlimited claims | Some insurers offer unlimited-claim variants at a higher premium. | Whether the higher premium is worth it for your use case. |
| Financed cars | Many lenders require or strongly push zero depreciation. | Your loan agreement and lender insurance conditions. |
Ask for the zero depreciation premium separately
Check the add-on cost as a separate line item, not bundled inside only one dealer quote
Compare dealer, online and agent quotes
Compare Zero-Dep add on prices separately, and read the inclusions carefully
Check claim limit
Confirm if the policy allows a limited or unlimited number of claims in a year, specifically for zero depreciation add on.
Check your loan
If the car is financed, read the lender's insurance requirement before skipping the add-on.
Match the premium to your likely repair risk
Give more weight to the add-on if bumper, grille, mirror, headlamp housing, paint or fibreglass damage would be expensive on your car.
Key takeaways
- Zero depreciation is a car insurance add-on that waives depreciation deductions on covered repaired or replaced parts.
- Material-based depreciation applies from day one: rubber, plastic, nylon parts, tyres, tubes, batteries, airbags and paint have 50% depreciation.
- Fibreglass parts have 30% depreciation, while glass parts face 0% depreciation.
- Metal parts follow a separate age-based depreciation: 5% under 6 months and 15% from 6 months to 1 year.
- Most insurers offer zero depreciation cover up to 5 years of car age, and may limit claims to 1 or 2 per policy year.
- Zero depreciation does not cover total loss, theft, mechanical or electrical breakdown, normal wear and tear.
Frequently asked questions
A new car does not always need zero depreciation cover, but it can be useful in year one because some claim deductions are based on material, not car age. Plastic, rubber, nylon, tyres, tubes, batteries, airbags and paint can face a 50% deduction under standard cover from day one.
Normal comprehensive cover pays eligible repair claims after applying depreciation deductions on parts. Zero depreciation is an add-on that waives those depreciation deductions for covered repaired or replaced parts, subject to the add-on's conditions.
No. Zero depreciation does not change total loss or theft settlements. Those claims are settled using the car's IDV, or insured declared value, subject to the policy terms.
Many insurers commonly allow 1 to 2 zero-dep claims per policy year. Some insurers offer unlimited-claim zero depreciation variants at a higher premium, so the exact number must be checked in the policy schedule.
Many lenders require or strongly push zero depreciation for cars bought on loan. If your car is financed, check the loan agreement and lender's insurance conditions before removing the add-on.
Zero dep insurance is not the same as basic comprehensive insurance. Comprehensive insurance can cover eligible accidental repairs, but depreciation deductions may still reduce the payout. Zero depreciation is necessary only if you want to reduce that depreciation share, subject to price, claim limits and exclusions.
About the authors
Nikhila PS
Written by · Senior Content EditorNikhila is a content creator with 6+ years in EdTech and motor insurance, turning complex policies into clear, engaging content. She enjoys exploring digital trends, social media, and art while planning her next short escape.
Rekhit Singh Kaushal
Reviewed by · Senior Director - Motor UnderwritingRekhit Singh Kaushal is Senior Director at ACKO, a leading digital motor insurance provider in India. With deep expertise in insurance strategy and innovation, he brings trusted insights on car and bike insurance to help drivers stay protected.
