Comprehensive Insurance vs Zero Depreciation
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Home / Car Insurance / 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.
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:
Depreciation Rates With and Without Zero Depreciation Cover
Here is the rate of depreciation chart as per the car’s age.
Here is the depreciation rate chart for car parts.
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.
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.
Which Is Better: A Comprehensive Policy With or Without Zero Dep?
A comprehensive car insurance policy helps cover damage to your vehicle resulting from an accident, theft, fire or natural disasters. However, when you raise a claim, the insurer usually subtracts depreciation on parts such as plastic, rubber and metal components. To that extent, you might still be liable for a part of the repair cost.
A Zero Depreciation (Zero Dep) option removes such a deduction by the insurer. The insurance company pays the claim amount in full for the replaced parts (as per the policy terms), thus, your share of the cost is reduced. Nevertheless, this also results in a slightly higher premium.
Example: Let's assume your accident car repair bill is ₹20, 000.
Without Zero Dep, the depreciation deductions can lower your claim to ₹14000, and therefore, you should pay ₹6000.
With Zero Dep, the insurance company may cover the entire amount of ₹20,000 (except the deductibles).
In case you desire complete financial protection and instant relief, especially for a newer vehicle, Zero Dep is probably the best option.
Frequently Asked Questions on Comprehensive vs Zero Depreciation vehicle insurance policy.
FAQs
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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