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Comprehensive Insurance vs Zero Depreciation

Team AckoAug 11, 2021

Buying vehicle insurance can be confusing. But with a little attention to detail, such confusion can be avoided. Whether it is Comprehensive or Third-party Insurance, you need to have thorough knowledge about the policy before purchasing it. Also, there are several add-ons that you can opt for enhanced insurance coverage. Zero Depreciation is one such add-on. Read ahead to know how a Comprehensive Insurance Plan is different from a Zero Depreciation Plan.

Comprehensive Insurance vs Zero Depreciation

What is Comprehensive Insurance?

Comprehensive Car Insurance Policy is an extensive plan to insure your vehicle in case of unfortunate incidents such as accident, theft, fire, explosion, or natural calamities. This policy offers wider coverage as compared to the Third-Party Car Insurance Policy. 

Apart from covering the insured vehicle against major risks, a Comprehensive Plan also covers the third-party liabilities as it includes the Third-party Cover. The insurance policy can be customized with various add-on covers such as Zero Depreciation, No Claim Bonus (NCB) Protection, Engine Protection, etc.

Relation Between Comprehensive Policy and Depreciation 

Comprehensive car insurance policy covers the repair cost of the vehicle incurred due to an unfortunate event. But you need to note that you cannot avail 100% reimbursement for the garage bill from your insurer. This is because the insurance company considers the depreciation (regular wear and tear) of the vehicle while settling claims.

Depreciation can be understood as a reduction in the value of an asset due to the wear and tear associated with the passage of time. For example, the cost of the car’s parts will reduce after a year as it will undergo natural wear and tear during that period. 

Thus, you will receive the claim settlement amount after deducting depreciation. To negate the depreciation calculation, you need to buy the Zero Depreciation Add-on.

What is Zero Depreciation Insurance?

Zero Depreciation is an add-on that does not consider the depreciation factor while settling claims. This means the depreciated value of the damaged part shall not be considered. The original cost of the damaged car part that needs replacement shall be considered. This way, you get a better claims pay-out. Zero Depreciation also goes by names like Nil Depreciation and Bumper to Bumper cover. Note that a Comprehensive Policy with the Zero Depreciation Add-on is commonly known as a Zero Depreciation Policy.

Comprehensive Insurance Vs Zero Depreciation

Here’s a comparison between a Comprehensive Vs Zero Depreciation Car Insurance:

Features Comprehensive Policy with Zero Depreciation Add-on Comprehensive Policy without Zero Depreciation Add-on
Coverage (Metal, Plastic, Glass) parts Depreciation is not considered for these parts. Before paying the claim amount, depreciation is considered for these parts.
Premium Slightly more than just a Comprehensive Plan. Less than the policy with the Zero Depreciation Add-on.
Claim Settlement The amount will be higher as the vehicle depreciation is not considered. The amount will be lower as the depreciation amount will be considered.
Cost of Repair (Plastic Parts) Covered by the insurer. Usually not covered by the insurer.
Age of the Car Depends on the insurer (generally for 3 to 5 years old cars). Applicable for cars of all ages.

Also, read: Difference between Bumper-to-Bumper and Comprehensive Insurance

How is a Zero Depreciation Insurance Policy Different from A Standard Car Insurance Policy?

Usually, a Third-party Liability Policy is considered as a basic or a standard car insurance policy. Some might also consider a Comprehensive Policy without any car insurance add-ons as a standard plan.

A Zero Depreciation Plan is simply a Comprehensive Policy with a Zero Depreciation Add-on. Thus, it is different from a standard Third-party Policy as it offers Own Damage plus Zero Depreciation Cover. And it is different from a standard Comprehensive Plan as it goes a step ahead and includes the Zero Depreciation Cover in the Comprehensive Plan.

Depreciation Rates With and Without Zero Depreciation Cover

Here is the rate of depreciation chart as per the car’s age.

Age of Car Rate of Depreciation Without Zero Depreciation Rate of Depreciation With Zero Depreciation
Under 6 months Nil 0%
6 months to 1 year 5% 0%
More than 1 year to 2 years 10% 0%
More than 2 years to 3 years 15% 0%
More than 3 years to 4 years 25% 0%
More than 4 years to 5 years 35% 0%
More than 5years to 10 years 40% 0%
More than 10 years 50% 0%

 Here is the depreciation rate chart for car parts.

Car Parts Depreciation Rate Without Zero Depreciation Depreciation Rate With Zero Depreciation
Plastic parts/Paint work /Rubber/Nylon/Batteries/Airbag parts/Tires/Tubes, etc. 50% 0%
Fibre parts 30% 0%
Glass parts Nil 0%

Benefits of A Comprehensive Car Insurance Policy

Comprehensive Insurance provides substantial insurance coverage for your vehicle. Below are the major benefits of opting for a Comprehensive Insurance Policy:

1) Avoid Penalties

As a Comprehensive Plan includes the law-mandated Third-party Cover, you shall be safe from penalties associated with not following the law as far as buying insurance is concerned.

2) Save Money

As a Comprehensive Plan comes with Own Damage cover, major repair costs shall be paid by the insurer if the car is damaged.

3) Better Coverage

You have the option to choose additional coverage for your vehicle with the Comprehensive Plan. By paying a little bit extra premium, you can opt for add-ons such as Zero Depreciation, Engine Protection Cover, Roadside Assistance, NCB Protection cover, Passenger Cover, etc.

These add-ons are designed to cover exceptions of a standard insurance policy. Note that add-ons cannot be purchased along with a Third-party Car Insurance policy or on a stand-alone basis.

Also, read: Return to Invoice vs. Zero Depreciation

Benefits of Having a Zero Depreciation Add-on Cover

Having a Zero Depreciation add-on offers extra insurance cushioning in case your vehicle meets with an accident. As it is purchased on top of a Comprehensive Plan, it comes with the associated benefits as well. Here are the top benefits of opting for this add-on.

1) Better Financial Security

With this plan, you will have the following insurance coverage leading to better financial security in case of vehicle damage/accidents.

  • Third-party Liability Cover

  • Own Damage Cover

  • Zero Depreciation Cover

2) Higher Claim Settlement

As depreciation of car parts is not considered while repairing/replacing them, you get a higher claim settlement amount. The other way of looking at it is that you have to pay less to settle the garage bill as a major chunk of it will be covered by the insurer.

3) Better Policy Management

As a Zero Depreciation Add-on does not cost a lot, you can include it without thinking too much about the financial impact of the inclusion leading to better policy management.

Also, read: Car Insurance Glossary

Frequently Asked Questions

Here’s a list of some of the prominent queries related to Comprehensive vs Zero Depreciation vehicle insurance policy.

Is it worth buying a Zero Depreciation Add-on with the base Comprehensive Policy?

Yes, a vehicle owner should buy the Zero Depreciation Add-on along with the base motor insurance policy to get a comparatively higher claims pay-out.

Who should opt for a Zero Depreciation Cover for their vehicle?

Anyone buying a Comprehensive Insurance Policy should opt for this add-on. However, some insurance companies offer this add-on only for cars that are not more than 3 years old. Some extend this limit to 5 years. It’s best to check with the insurance company before buying the add-on.

Zero Depreciation Policy is ideal for which customers?

Those who own new or relatively new cars should buy this add-on to make the most of their car insurance cover.

Is choosing Zero Depreciation Cover a better option than avoiding it?

As per the coverage offered, choosing Zero Depreciation is a better option than avoiding it.

What is not covered by the Zero Depreciation Cover?

Zero Depreciation add-on doesn’t cover the regular wear and tear, and mechanical breakdown of the vehicle. Please check the Policy Wordings to get a clear idea about the exclusions.

Which type of insurance is best for a car, Third-party or Comprehensive plus add-ons?

Mandated by law, the Third-party Insurance covers third-party losses. However, a Comprehensive Car Insurance Policy provides coverage for the insured vehicle as well as third-party losses in case of an accident. It also offers the option to opt for various add-on covers for better coverage. Thus, it is advised to get a Comprehensive Insurance Policy for your car.

Is Zero Depreciation Cover transferable to the new owner while selling the car?

Yes, as the insurance policy applies to the vehicle, not the vehicle owner, the cover including the add-on is transferable to another owner. Note that for this, the vehicle registration number should be the same and the proper transfer process as per the Regional Transport Office’s requirements needs to be followed.

Can I buy the Zero Depreciation Add-on for commercial vehicles?

The answer might vary from one insurer to another. Please confirm with the insurer to know whether the Nil Depreciation is applicable for a commercial vehicle.

Is it possible to claim Zero Depreciation again if I already have claimed it once during the same policy period?

Yes, it is usually possible to claim up to a maximum of two times during your policy period. Note that such details must be verified by going through the Policy Wordings before buying the policy.

Is Nil Depreciation cover available for old cars?

Generally, a Nil Depreciation or Zero Depreciation cover is applicable for cars that are under 5 years old; but it can vary. Some insurance companies offer this add-on for the cars under 3 to 5 years of age, while some offer this add-on to the vehicles irrespective of their age.

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