What is zero depreciation car insurance?
Zero depreciation car insurance is a comprehensive car insurance policy with add-on coverage. It means that your car’s depreciation does not affect your insurance claim.
All insurers account for depreciation on the car’s parts without zero depreciation coverage and therefore pay you the claim amount after subtracting depreciation. With zero depreciation, the entire claim amount is paid by the insurance company without considering depreciation. This add-on comes with a higher premium. Since this feature eliminates any out-of-pocket costs for the owner, it is highly recommended.
Benefits of Zero Depreciation Car Insurance Cover
- Additional Protection: The zero depreciation add-on cover is beneficial for new drivers and experienced drivers, as it offers additional protection from financial problems caused by car accident damages.
- Repair Cost Considered without Depreciated Value: The cost to replace or repair a car’s insured parts is not taken into account as part of the computation.
- Curbs Additional Expenses: During claim settlement, the cost of depreciation is not considered, thus limiting out-of-pocket expenses.
- Save Money in the Long Run: With a zero-depreciation cover, the premium amount becomes higher. In a case of an accident, the claim amount will not take into account the depreciation of the car hence giving you a higher compensation. This compensation amount is usually much higher than the premium paid for the add-on.
- Maximum Compensation: The maximum amount you can claim is determined by the policy’s IDV. The depreciation rate directly impacts this. Hence, you can make claims that do not consider depreciation and receive a higher claim amount with zero depreciation add-on coverage.
- Peace of Mind: Car insurance protects the car owner and the vehicle by compensating for losses and ensuring peace of mind. An add-on cover with zero depreciation negates the car’s depreciation rate further strengthening this argument.
Why should you opt for zero depreciation car insurance?
If you plan to buy a new car soon, avoid getting a zero depreciation cover for your existing vehicle. This plan is best suited for you under the following circumstances:
- Just purchased a new car
- Have a luxury/sports car
- Are an inexperienced driver
- Have a four-wheeler with expensive spare parts
- Lived in an accident-prone area
Overall, zero depreciation car insurance is a smart investment for cars less than five years old. In the event that you need to file a claim, it will make the process easier and more beneficial for you.
Factors to consider before opting for Zero Depreciation Cover :
The following are a few important points to consider while opting for car insurance with a zero depreciation policy:
- Your car’s age should be taken into consideration. Vehicles under the age of 3 years can take advantage of the zero depreciation policy on car insurance. In other words, only new cars are eligible for a zero depreciation car insurance policy.
- Premiums are slightly higher than those for regular car insurance. A car older than 3 years should not have high insurance premiums. A zero depreciation cover add-on may be a good idea if you own a luxury car or live in a high-risk area. There are three main factors that determine the premium for a zero depreciation policy:
- Age of the car
- Model of the car
- Your location
One cannot foresee the occurrence of an unfortunate incident and the right insurance with proper add-on covers will always come in handy. To know more about zero depreciation insurance plans and add-ons available for your car, click here!