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Zero Depreciation Car Insurance

Protect your car with ACKO Zero Depreciation cover.

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Home / Car Insurance / Zero Depreciation Car Insurance - Nil Depreciation: Benefits

What is Zero Depreciation in Car Insurance?
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What is zero depreciation in car insurance? Zero Depreciation in car insurance is an add-on that eliminates depreciation costs during claims, ensuring full coverage for own damages. In other words, with this add-on, the insurance provider will not consider the depreciation costs during claim settlements.

Should You Opt for Zero Depreciation Car Insurance Cover?
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If you have recently purchased a car or own a luxury car, buying a Zero Depreciation cover makes a lot of sense. It will reduce your out-of-pocket expenses in case of damages to your car. Following are some of the reasons to opt for a Zero Dep cover for your car insurance.

Benefits of Zero Depreciation Car Insurance Add-On
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Here are the key advantages of buying a Zero Dep car insurance.

Increases the Claim Settlement Amount
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Buying the Zero/Nil Depreciation Add-on Cover bridges the gap between the claim settlement amount and the actual damages to your car. For example, if the repair cost is Rs. 30,000, then the insurance company will settle your claim for Rs. 15,000 after deducting depreciation value. However, if you have opted for the Zero Depreciation Add-on, the insurer will settle the claim amount of Rs. 30,000, thereby increasing the claim settlement amount.

Protects from Financial Loss
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Zero Dep car insurance helps in increasing the claim settlement amount. Hence, you are certainly controlling the outflow of your hard-earned money. Without the Zero Dep Add-on, you end up paying the unpaid portion of the claim, which is deducted as depreciation. And, if the damage to your car is considerable, the repair bill will certainly be higher and burn a hole in your pocket.

The Add-on Comes at an Affordable Cost
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While the Zero Depreciation Car Insurance Add-on Cover is offered with an additional premium, the cost is low and affordable. You can compare the Nil Depreciation premium online and then choose the plan with the lowest premium. Additionally, by including the Zero Depreciation Add-on to the Comprehensive Car Insurance, your car and your money are well-protected at an affordable cost.

How is Zero Depreciation Car Insurance Premium Calculated
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Various factors come into play when calculating Zero Depreciation car insurance premiums. Following are some of the critical factors that impact the premium of the Zero Dep add-on.

Geographical Location
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Every city has its different challenges, problems and risks. Hence, the premium of this add-on cover depends on the location where you will be driving your car.

Age of Your Car
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Zero depreciation add-on premium is dependent on the age of your car, and hence car's age plays a pivotal role.

Make/Model of Your Car
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The make and model of your car will have an impact on the cost of the parts. Hence, the model of your car determines the premium for this add-on cover.

Depreciation Rates in Car Insurance
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The depreciation rate in cars varies depending on the type of vehicle component and the car’s age. To make things easier for insurers and policyholders, IRDAI (Insurance Regulatory and Development Authority of India) has set the depreciation rate for cars. The following sections provide more details on the same.

Rate of Depreciation for All Parts Approved by IRDAI
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CAR PARTS

RATE OF DEPRECIATION

Rubber/Plastic/Nylon/Batteries

50%

Fibre Parts

30%

Wooden Parts

5% in the first year, 10% in the second year, and so on.

Rate of Depreciation in Vehicles
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AGE OF CAR

RATE OF DEPRECIATION

Less Than 6 Months

5%

More Than 6 Months to 1 Year

15%

More Than 1 Year to 2 Years

20%

More Than 2 Years to 3 Years

30%

More Than 3 Years to 4 Years

40%

More Than 4 Years to 5 Years

50%

More Than 5 Years

To be mutually decided between the insurer and policyholder

Rate of Depreciation in Vehicles: Metallic Parts
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AGE OF CAR

RATE OF DEPRECIATION

Less Than 6 Months

Nil

More Than 6 Months to 1 Year

5%

More Than 1 Year to 2 Years

10%

More Than 2 Years to 3 Years

15%

More Than 3 Years to 4 Years

25%

More Than 4 Years to 5 Years

35%

Exceeding 5 years but not exceeding 10 years

40%

More Than 10 Years

50%

Zero Depreciation Car Insurance vs Comprehensive Coverage
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The main difference between Zero Depreciation car insurance and Comprehensive coverage is that Zero Depreciation is an add-on, and Comprehensive coverage is a car insurance policy. 

The following table highlights the key differences between Zero Depreciation Cover vs Comprehensive coverage.

PARAMETER

ZERO DEPRECIATION CAR INSURANCE

COMPREHENSIVE CAR INSURANCE

Meaning

An optional add-on while buying Comprehensive Car Insurance. It will ensure the insurance company does not deduct depreciation of car parts before settling the claim for the damages to your car.

A bundle of Third-party Liability Plan and Own Damage Plan. Several add-ons can be included to make it exclusive; however, it considers the depreciation of car parts before settling the claim.

Premium

There is a slight increase in car insurance premium, but it ensures there is no depreciation of car parts during claim settlements. 

The premium for the standalone Comprehensive Policy is lower than a policy that has add-ons such as Nil or Zero Depreciation.

Age of Car

The add-on can be purchased for cars that are less than 5 years old.

The Standalone Comprehensive Car Insurance can be purchased for cars that are less than 15 years old.

Depreciation Factor

Depreciation of car parts is not considered while settling claims except for compulsory deductibles.

Insurers consider the depreciation of car parts while settling claims.

Savings

While the premium you pay might be slightly higher, the cost of paying for the depreciation of car parts is nullified.

While the premium is lower than that of Zero Dep Car Insurance, you get to save only on the premium you pay.

How to Buy Zero Depreciation Car Insurance
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You can buy the add-on cover online while purchasing or renewing the car insurance. Buying a Zero Depreciation Car Insurance Policy is a lot easier, thanks to digital insurance providers such as ACKO. Here are the steps to buy Zero Dep cover from ACKO.

Step 1: Go to the top of this page or download the ACKO app.

Step 2: Enter your car registration number, verify the vehicle details and click on “View Plans”.

Step 3: Select Comprehensive Policy with Zero Dep cover and purchase the plan by paying the premium online.

Note: You cannot opt for Zero Depreciation Cover while buying Third Party Car Insurance.

How to Renew Zero Depreciation Car Insurance
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The process of renewing Zero Dep cover is similar to renewing a car insurance policy. You can refer to the following steps to renew the Nil Depreciation cover from ACKO.

Step 1: Enter the vehicle registration number by going to the top of this page or downloading the ACKO app.

Step 2: Select the Comprehensive Plan with Zero Depreciation cover from the available plans. Step 3: Pay the premium online to instantly renew the Zero Dep cover.

Claim Settlement with Zero-Depreciation Car Insurance
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During claim settlement, the insurer will deduct the depreciation applicable on car parts. The rate of depreciation will be mentioned in the policy wording. However, when you claim against Zero Dep car insurance, you will receive the full claim amount without any deduction due to depreciation. Hence, you need not pay out of your pocket for car repairs. The claim process also becomes simple with Zero Depreciation cover as you need not worry about deductions due to the depreciation rate.

Advantages of Buying Nil Depreciation Add-On Cover with ACKO
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Here are the key benefits of buying Zero Depreciation cover online from ACKO.

Exclusive Plans
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When you buy on ACKO, you can buy this add-on cover along with a Comprehensive policy. Or you can also buy a Standard Comprehensive plan bundled with Zero Depreciation benefits that are exclusively available on ACKO.

Low Premium
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When you buy on ACKO, you directly deal with us. Since there are no middlemen involved, it results in low operating costs. We pass on the benefits to you in the form of low-cost insurance plans.

Value-Added Services
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When you buy on ACKO, you not only enjoy the benefits of the Comprehensive Insurance & Zero Depreciation add-on cover. You can also avail of premium services like free pick-up and doorstep delivery in select cities.

What is Not Covered in a Zero Depreciation Add-on Cover?
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A Zero Dep insurance covers most expenses arising out of damage to your car. However, there are a few exclusions, which are listed below.

Not Valid for Cars Aged More Than 5 Years Old
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Zero Depreciation add-on does not cover cars that are more than 5 years old. Please read the terms and conditions, as some insurers do not offer cover for cars over a certain age.

Total Loss/Constructive Total Loss of the Car
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In case of an unfortunate accident that renders the car a total loss, a Zero Depreciation add-on will not be considered while settling the claim. The current market value of the car is considered while settling claims towards a car that has undergone a total loss.

Replacement of Certain Car Parts
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Replacement of tyres and tubes, unless specified in the terms and conditions of the policy, is not covered under the Zero Depreciation cover.

Driving Without a Driving Licence
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If you are driving the car without a valid Driving Licence and you meet with an unfortunate accident, then the insurance company will not honour the claim. In this case, even the Zero Dep insurance add-on will not be considered.

Driving Under the Influence of Alcohol/Intoxicating Substances
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Your claim towards the repair bill for the damages to your car will be dishonoured if the driver is found driving under the influence of alcohol or an intoxicating substance.

Doesn’t Cover Consumables Cost
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This car insurance add-on cover does not compensate for the costs of consumables such as nuts and bolts, screws, gearbox oil, brake oil, lubricants, etc.

Doesn’t Cover Mechanical/Engine Breakdown
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Regular wear and tear, mechanical breakdown or engine breakdown are not covered under the Nil Depreciation add-on cover.

Doesn’t Cover Compulsory Deductibles
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While settling claims, the Zero Depreciation add-on covers only the cost of the car part’s depreciation and does not cover compulsory deductibles.

Frequently Asked Questions-FAQs
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Frequently Asked Questions-FAQs

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Should I buy zero depreciation car insurance?

Purchasing a Zero Dep car insurance purely depends on your requirements and the type of car you own. For instance, if you own a luxury car or have bought a new car, buying a Nil Depreciation cover makes sense.

Is it good to take zero depreciation car insurance after 5 years?

Zero Dep add-on cover is only available for cars less than 5 years old. So, you cannot purchase the add-on if you own a car which is more than 5 years old.

Who is eligible for zero DEP insurance?

If your car is less than 5 years old, you are eligible to buy the Zero Depreciation add-on along with the Comprehensive Car Insurance Policy.

Is zero depreciation the same as bumper-to-bumper?

Yes, zero depreciation is the same as bumper-to-bumper. They are just different names given to the same add-on cover.

Does zero DEP cover tyres?

No, the Zero Depreciation add-on does not cover car tyres since they are subject to wear and tear.

Need More Help?
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Have queries related to ACKO’s two wheeler insurance policy? Refer to our Policy Wordings for detailed information or reach out to us via email or phone using the information below

Email
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Write to us at [email protected]

Phone
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Call us on 1800 266 2256