Home / Articles / Car Insurance / Difference between own damage and zero depreciation car insurance
Team AckoMay 17, 2022
When you set out to buy a car insurance policy, the two most common terms you will hear (or read) are “own damage” and “zero depreciation”. These terms define the extent of your policy’s coverage and decide how the claim amount will be calculated. Let’s deep dive into what own damage and zero depreciation in car insurance are and how different these two concepts are from each other.
Contents
You can get car insurance coverage for own damage only if you buy a Comprehensive Plan. On the other hand, you need to separately buy the Zero Depreciation car insurance add-on to get coverage against depreciation on the vehicle. Both covers help you get more out of your car insurance plan. Let’s understand in detail what is the meaning of Own Damage and Zero Depreciation.
There are two major types of coverages offered under a car insurance policy. First is the mandatory, Third-party Car Insurance Policy, and the second one is Own Damage Cover.
The former will help you cover third-party losses like property damage, injury, or death. But it does not cover your car against damages. That is the job of the Own Damage cover. You can claim damage to your car only if you have a Comprehensive Car Insurance policy, i.e. only if it covers Own Damage.
To understand Zero Depreciation, we must first know what depreciation is. Depreciation refers to the decrease in the car’s value with time. It is important to not only price your policy during car insurance renewal but also plays a huge part in the case of claims.
The insurer will deduct the applicable depreciation from your car insurance claim. This is where zero or nil depreciation comes into the picture. You can get more claim amounts if your car has extensive damage, as the insurer will not deduct the depreciation applicable to the car.
Questions | Own Damage | Zero Dep Car insurance |
How is depreciation calculated for a car's age? | Depreciation will increase with an increase in the car's age. | The car's age will not matter with the Zero Depreciation policy until its validity. |
How is the cost of car parts calculated during car insurance claims? | There will be depreciation on car parts as per their type and car's age. This will be deducted from the claim amount. | The depreciation on car parts will not be taken into consideration. |
Do I need to pay a higher premium? | No, the own damage premium is comparatively lower than the premium for a Zero Dep policy. | Yes, the premium on a Zero Dep policy is higher as compared to the premium for the own damage cover. |
Is the claim amount higher? | No, the claim amount will be lower. | Yes, the claim amount will be higher. |
To simplify both concepts, let’s go back to see what happened when the two people with a similar car model made a claim.
Since they both bought their cars in the same year, a similar amount of depreciation was applicable to the vehicles. Coincidentally, they both also damaged their cars on the same turn on the road a few months apart, so the damage was similar.
The claim amount of the person with the Own Damage cover received less claim amount than the other person who had a Zero Dep policy. This is because depreciation decreased the claim amount for the former.
Also, read: Difference Between Third Party vs Zero Depreciation Car Cover
Now that you understand the difference between own damage and zero depreciation, let’s move on to the list of people that will benefit from buying these two types of policies.
Here is a list of situations when you can go for a basic Comprehensive Car Insurance Policy with Own Damage cover.
If your car is beyond the age of 5 years and the insurance company is not ready to offer a zero dep policy.
If you are on a tight budget for buying car insurance.
If you use the car very rarely.
If you are a safe driver and follow all the traffic laws to the best of your ability.
Here is a list of situations when you can go for a Comprehensive Car Insurance Policy with Zero Depreciation Cover.
If you own a new car that is less than 5 years old.
If you own a luxury car with expensive car parts.
You can stretch your car insurance budget to accommodate additional coverages.
If you are a new driver and are learning to drive.
Following is a list of common questions related to own damage and zero depreciation car insurance. Please feel free to contact us via email at [email protected] if you would like us to answer more of your questions.
Yes, IDV, which stands for Insured Declared Value, is the approximate current market price of the car. You (the car owner) need to set this value while buying the policy, and it helps to decide the claim amount in case of a major claim. For example, when the car is damaged beyond repair or when car theft occurs.
I accidentally damaged my car while driving. Can I still claim against my car insurance policy?Absolutely yes! The Own Damage cover plays an important role in situations like these. So, if you have a Compressive Car Insurance Policy, then you can claim for the damages suffered by the car.
What is the validity of the Zero Dep Car Insurance Policy?The validity of a car insurance policy can be one, three, or five years depending upon the plan you choose. But, since Comprehensive long-term policies are more expensive as compared to an annual policy, people prefer to go with the less expensive option.
Are tyres and brake pads excluded from depreciation in the Nil Depreciation policy?No, things like tyres and brake pads usually wear out with time. They are not taken into consideration while calculating the claim amount for Zero Dep insurance. So the car owner needs to bear the cost of repairing or replacing the parts unless they get damaged during an accident.
Explore more:
Want to post any comments?
93% Acko users save atleast ₹1,200 on car insurance
Car insurance starting ₹2,072*
You already have an Acko policy
Login to access your policy for this car
Recent
Articles
Is a PUC certificate mandatory for vehicle insurance?
Team Acko May 13, 2022
Importance of cooling-off period in health insurance
Team Acko May 10, 2022
Understanding dental insurance in India: Cover, benefits, and claims
Team Acko May 6, 2022
Does health insurance cover brain surgery?
Team Acko May 6, 2022
10 tips to save on health insurance premium
Team Acko Apr 29, 2022
All Articles
ACKO General Insurance Limited
2nd Floor, #36/5, Hustlehub One East, Somasandrapalya, 27th Main road, Sector 2, HSR Layout, Bengaluru, Karnataka - 560102
We’re socially active!
Download our app
Company
Support
CIN: U66000KA2016PLC138288
IRDAI Registration No: 157
Category: Non-Life Insurance
The use of images and brands are only for the purpose of indication and illustration. ACKO claims no rights on the IP rights of any third parties. The ratings are derived from reviews and feedback received from Google and Facebook users on their respective platforms. | *Savings of upto Rs. 50,000 have been calculated on the IDV of Rs. 18,00,000 and 0% NCB. Amount saved is in comparison to tariff rates. Product name: Private Car Policy - Bundled | UIN: IRDAN157RP0014V01201819 |
Trade logo displayed above belongs to ACKO Technology & Services Pvt Ltd and used by ACKO General insurance Limited under License. For more details on risk factors, terms, conditions and exclusions, please read the policy wordings carefully before concluding a sale.