Zero Depreciation Car Insurance: Coverage, Claim & Benefits

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What is Zero Depreciation in car insurance?

Zero Depreciation is an add-on cover under which the insurer does not consider the depreciation cost of damaged parts (reduction in value due to wear and tear over a period of time) during claim settlement. In other words, with a Zero Dep cover, you will receive a higher claim settlement amount as compared to a case where you don’t have this cover. Typically, during claim settlement, an insurer deducts the depreciation value of parts before replacing the damaged parts. However, with this add-on, there’s no such deduction, and you receive the 100% claim amount (apart from any other specified deductibles or applicable costs as per the policy’s terms and conditions).

Meaning of Depreciation in Car Insurance

Depreciation in simple terms is the decrease in the value of your car. This reduction is due to its natural wear and tear with time. The older the car, the higher the depreciation. Insurers deduct the depreciation amount while settling the claims, which reduces the claim amount.

What is Zero Depreciation?

When you buy Comprehensive Motor Insurance along with Zero Depreciation/Nil Depreciation cover, insurers will not deduct the depreciation amount while settling claims. Hence, you will receive a higher claim amount during settlement. You can avail of this add-on cover when you buy car insurance for new car or at the time of car insurance renewal.

Zero Depreciation in Car Insurance Meaning

Zero Depreciation Add-on Cover is also referred to as Nil Depreciation or Bumper to Bumper Car Insurance. While you need to pay an additional premium for this add-on, this can eliminate the possibility of paying from your pocket during claim settlements. This way you need not worry about unexpected expenses.

How is Depreciation Calculated?

The Insurance Regulatory and Development Authority of India (IRDAI) has set the depreciation rates for cars. Below are the tables which show how depreciation is calculated.

Rate of Depreciation for All Parts Approved by IRDAI

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

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 insurer and policyholder

Rate of Depreciation in Vehicles – Metallic Parts

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%

Impact of Zero Depreciation coverage

Opting for Zero Dep coverage will majorly affect three components of car insurance; coverage (the coverage of your car insurance policy will increase), claim amount (you can claim more as depreciation will not be calculated if you have opted for Zero Dep), and premium (it will increase slightly as Depreciation Shield in car insurance offers more coverage than a basic Comprehensive policy).

Also, read: Calculate Premium with Car Insurance Calculator

Features of ACKO's Zero Dep Plan

When you opt for the Zero Dep plan, ACKO will bear the cost of depreciation in case of accident claims. Here are the features of a car insurance policy with a Zero Depreciation feature.

1. The Zero Dep add-on is available on fairly new cars (usually, cars under the age of 5 years). If you have a car beyond the age of 5 year, you can always contact us to discuss the possibility of getting the Zero Depreciation cover.

2. Depreciation on car parts will not be taken into account during claim payout. This increases the claim amount as the wear and tear factor is completely eliminated. Thus, Zero Depreciation is one of the most sought after car insurance coverages.

3. Your out-of-pocket expenses are greatly reduced as we will bear related costs under your Zero Dep plan.

Benefits of Zero Depreciation Car Insurance Add-on

Apart from offering you peace of mind when it comes to unexpected expenses due to an unfortunate accident, there are several other benefits of a Zero Depreciation Insurance Add-on which are listed below.

1. Increases the Payable Claim Amount

Buying the Zero or Nil Depreciation Add-on Cover will give you an added advantage and help you bridge 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. 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 payable claim amount.

2. Protects Your Hard Earned Money

Since the Zero Depreciation Add-on helps in increasing the payable claim amount, 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. And, if the damage to your car is considerable, the repair bill will certainly be higher and burn a hole in your pocket.

3. The Add-on Comes at an Affordable Cost

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.

Advantages of Buying Nil Depreciation Add-on Cover on ACKO

Optimize Savings

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

Exclusive Plans

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.

Value-added Services

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

What is Not Covered in a Zero Depreciation Add-on Cover?

While this add-on covers most expenses arising out of damages to your car, it has its limitations as well. Here is a list of exclusions when you buy a Zero or Nil Depreciation Add-on Cover.

Not Valid for Cars Aged More Than 5 Years Old

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 the cover for cars over a certain age.

Total Loss/Constructive Total Loss of the Car

In case of an unfortunate accident that renders the car a total loss, 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

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

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 Depreciation add-on will not be considered.

Driving Under the Influence of Alcohol/Intoxicating Substances

Your claim towards the repair bill of 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

This car insurance add-on cover does not compensate the costs of consumables such as nuts and colts, screws, gearbox oil, brake oil, lubricants, etc.

Doesn’t Cover Mechanical/Engine Breakdown

Regular wear and tear, mechanical breakdown or engine breakdown are not covered under the Nil Depreciation add-on cover.

Doesn’t Cover Compulsory Deductibles

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

Also, read: Vehicle Scrappage Policy in India

ACKO's Claim Procedure

The claim process for Depreciation Waiver cover is as simple as claiming against a normal car insurance plan. At ACKO, you can raise a claim in just the following 3 steps.

Step 1: You must log in to your ACKO account by using your registered mobile number.
Step 2: Find your Zero Depreciation Car Insurance policy and click “Claim”.
Step 3: Answer a few questions to describe the claim in detail and submit the claim for further processing.

Note - ACKO will review your Zero Dep claim to determine if it can be fast-tracked. If yes, then you can expect the claim amount within a few hours.

Which Factors Affect the Bumper-to-Bumper (Zero Depreciation) Insurance Premium?

When the insurance company sets the premium for the Bumper-to-Bumper car insurance, it will consider the below factors to arrive at the premium that you will have to pay for your car.

Location of Your Residence

Every city has its different 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

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

Model of Your Car

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.

Also, read: Comprehensive Insurance vs Zero Depreciation

How is Zero Depreciation/Nil Depreciation Different From a Standard Comprehensive Cover?

Below is the table highlighting key differences between Zero Depreciation Cover Vs. Standard Comprehensive Car Cover.

Particulars	Zero Depreciation Car Insurance	Comprehensive Car Insurance
Meaning	An optional add-on while buying Comprehensive Car Insurance. This 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 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 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.
Cost of repairing parts	The cost is borne by the insurance company (such as ACKO).	The cost has to be borne by you.

How to Buy Zero Depreciation Car Insurance?

Buying a Zero Depreciation Car Insurance Policy is a lot easier with the advent of digital technology. You can buy the add-on cover online while purchasing or renewing the car insurance.

Simply select the Zero or Nil Depreciation Add-on when you are processing the Comprehensive Car Insurance Plan on ACKO. However, you cannot buy this add-on with the Third-party car insurance policy.

Also, read: Compare Car Insurance Policies Online

Factors to Consider Before Opting for a Zero Depreciation Cover

The following are important factors to consider before choosing to buy the Zero Depreciation Cover.

Age of the Car

The Zero Depreciation Car Policy is applicable for cars under 5 years old only. However, some insurers such as ACKO offer the cover for cars above 5 years old. Ensure you check with the insurance company before opting for the add-on.

Premium of the Policy

With Zero Depreciation Add-on, the premium is bound to increase by approx. 15%. However, this varies from insurer to insurer. Consider the increase in the premium before choosing the add-on cover.

Limit on Number of Claims

You can only raise a limited number of claims during the policy period. However, on ACKO, there is no limit to the number of claims you can raise. However, do check with the insurance company about the same.

Renewing Zero Depreciation Policies

With the advent of digital technology, the process to renew a car insurance policy is faster and easier.

Step 1

Visit ww.acko.com or download the mobile app and log in to your account.

Step 2

Go with the same plan or modify the plan. Make the payment and renew the policy instantly.

Reasons to opt Zero Depreciation plan

The Zero Dep Car Insurance plan enhances your Comprehensive policy with additional coverage. When you opt for the Depreciation Waiver cover, you enjoy a higher claim amount during settlement. Here are a few reasons to get Depreciation Shield coverage.

Did you know that the value of any brand new car under the age of 6 months is reduced by 5% the moment it leaves the dealer’s showroom? This is because the value of a car begins decreasing due to wear and tear with time. The Depreciation Shield will help you get the car part’s full cost if damage occurs within the first 6 months.
Many car owners treat their cars with utmost care and cannot tolerate even minor damages like a scratch or small dents. If you are one of them and don’t wish to spend money on these repairs, then opting for a Zero Depreciation cover is a good idea. Any accidental damage can be claimed and we will pay the repair cost without factoring depreciation.
Usually, people prefer practicing on second-hand cars if driving is a newly acquired skill. Sometimes, it may happen that an inexperienced driver wishes to drive a new car. Here the risk of damage is higher as the person may not be well versed with driving. The Zero Dep Plan will ensure maximum insurance coverage if the new car gets damaged.

Who should consider buying a Zero Dep Car Insurance Plan?

A Zero Dep Car Insurance plan is perfect for you if you fall into any of the following categories.

If you don’t have a dedicated parking space, the chances of damage increase. The Zero Dep plan will help you cover repair costs for such damages.
If you are living in a high-risk area or new to driving a car.
Buy the Zero Depreciation Plan if you have recently learned how to drive a car.
If you own a luxury or expensive car with costly car parts.
If you are someone who wishes to reduce out-of-pocket expenses in case of car damage.
Opt for a Zero Dep cover if you need to repair minor damages to keep the car in a top notch condition.
If you are worried about small dents and bumps or expensive spare parts.

Also, read: Insurance for Bike

Frequently Asked Questions About Zero Depreciation Car Insurance

Below are some of the common questions about the Add-on: Zero Dep Car Insurance.

Generic FAQs

Claims Related FAQs

Generic Frequently Asked Questions

Is Nil Depreciation Cover transferable to another owner?

Yes, Nil or Zero Depreciation Cover is transferable to the new owner of the vehicle. Since the insurance policy is on the vehicle and not the owner, the vehicle registration number should be the same.

Is Zero Depreciation Cover available for commercial vehicles?

On ACKO, this option is not currently available for commercial vehicles. Please refer to the terms and conditions or policy wordings for Zero Depreciation Add-on for commercial vehicles as it may differ between insurance companies.

Where is Zero Depreciation mentioned in the policy document?

If you have opted for Zero Depreciation as an add-on to your Comprehensive Plan, the policy document will clearly mention the add-ons that you have opted for.

Is a Zero Depreciation Cover worth it?

If you own an expensive car, live in an accident-prone area, new car owner, a new driver, or worry about dents, a Zero Depreciation cover is certainly worth buying along with the regular Comprehensive insurance plan.

How is the Zero or Nil Depreciation Cover different from Standard Comprehensive Cover?

A Zero Depreciation Car Insurance certainly adds value to your car insurance plan since it does not consider depreciation of car parts while settling claims. For more details, you can check "Zero Depreciation Cover Vs. Normal Car Cover" Section.

Is Zero Depreciation cover applicable only for new cars?

The Zero Depreciation cover is available for cars that are less than 5 years old. Some insurers may provide this add-on for vehicles more than 5 years old as well. To know more, you can get in touch with our support team.

Under which depreciation method, assets of the car can be depreciated until the net scrap value is zero?

When the value of the assets or parts of the car has no market value, its net scrap value is considered zero.

Is Zero Dep better than Comprehensive Car Insurance?

While a Comprehensive Car Insurance policy offers Own Damage cover (insurance coverage for your car) and Third-party liability cover, you still need to bear the depreciation as per car's age in case of claims. This decreases the claim amount and increases your out-of-pocket expenses for repairing the car's damage. Opting for a Zero Dep plan will ensure that ACKO will bear the depreciation on your car. You can thus get more money during claim settlement if you have a Zero Dep plan as compared to a Comprehensive policy.