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Zero Depreciation Car Insurance
Zero depreciation, also known as bumper to bumper insurance or nil depreciation insurance, is an add-on cover in car insurance that protects the vehicle's depreciation value. You can opt for zero depreciation cover along with your comprehensive car insurance policy. Generally, during claim settlement, an insurer deducts the depreciation value of parts before replacing the damaged parts. However, with zero depreciation insurance, there's no such deduction, and you receive the 100% claim. Most assets, like our cars, see wear and tear over a period of usage. This causes a dip in the total value of the asset, known as depreciation. Zero Depreciation insurance means that despite the value of your car going down with time, you get complete coverage on expenses incurred in case of damage due to an unforeseen event.
With the help of this add-on cover, you can get a complete claim amount from the insurer without deduction of the vehicular part depreciation. It is advisable to have a relevant zero depreciation car insurance plan, or top up your comprehensive car insurance plan with the bumper to bumper HDFC ERGO add-on!
How Does Zero Depreciation Cover Work?
When it comes to maximising claim payouts and savings, the zero depreciation add-on in car insurance works like a charm. Under the standard standalone OD or comprehensive car insurance, your insurance claims suffer a deduction of the depreciation rates of the damaged part. However, with the zero depreciation added in, you can ensure 100% payout during claim settlements, meaning that the depreciation rate will be 0%, even if your car is old.
To put things into context, here are a couple of examples showing what happens when your car insurance is and isn’t equipped with the zero depreciation add-on cover;
Case 1: Car insurance without Zero Depreciation add-on
Suppose your car meets with an accident where its bumper gets damaged. The repair cost for the bumper is estimated at ₹ 7,000. So, when you file a claim, we will offer a payout of ₹ 2500 after factoring in the ₹ 1,000 standard deductible and 50% depreciation on plastic parts. This means you will have to cover the remaining ₹ 4500 bill from your own pocket.
Case 2: Car insurance with Zero Depreciation add-on
Now, suppose your car meets with an accident that damages its bumper, but this time you have zero depreciation add-on cover. So, if the bumper repair cost is estimated at ₹ 7,000, we will pay a claim amount of ₹ 6,000 after factoring in only the standard deductible of ₹ 1,000. The 50% depreciation rate on the car’s plastic parts will not be applicable in this case. This means your out-of-pocket expense will be reduced and your savings will be maximised.
Depreciation Rates in Car Insurance
At the time of claim settlements under the standard policy, the insurer makes the claim payout based on the fixed depreciation rates of the said vehicle parts/components. The rate of depreciation of these car parts is decided by the Insurance Regulatory and Development Authority of India (IRDAI) each year. The following tables highlight the current depreciation rates of cars and various car components;
Depreciation rates of different car parts as per IRDAI
| Car Components | Rate of Depreciation |
| All plastic/nylon/rubber parts, tubes and tyres, airbags and batteries | 50% |
| All fibre glass components | 30% |
| All parts made of glass | NIL |
Depreciation rates in vehicles
| Age of Car | Rate of Depreciation |
| Less than 6 months | 5% |
| Between 6 months and 1 year | 15% |
| Between 1 year and 2 years | 20% |
| Between 2 years and 3 years | 30% |
| Between 3 years and 4 years | 40% |
| Between 4 years and 5 years | 50% |
| Exceeding 5 years | Mutually decided between the policyholder and the insurer |
Depreciation rates for all other car parts (including metal & wooden parts)
| Age of Car | Rate of Depreciation |
| Less than 6 months | Nil |
| Between 6 months and 1 year | 5% |
| Between 1 year and 2 years | 10% |
| Between 2 years and 3 years | 15% |
| Between 3 years and 4 years | 25% |
| Between 4 years and 5 years | 35% |
| Between 5 years and 10 years | 40% |
| Exceeding 10 years | 50% |
What are the Benefits of Zero Depreciation Add-on in Car Insurance?
Here are some of the major benefits of having a zero depreciation add-on in your car insurance policy;
• Higher Payout in case of a claim: Although you will have to pay an extra premium for opting zero depreciation add-on, it will offer you lots of benefits in the long run. Zero depreciation car insurance does not consider depreciation when settling your claims. This will ensure you get a much higher payout for part replacements.
• Save Money: Having a Zero Depreciation add on ensures that you do not have to bear additional financial expenses from your pocket if there is a claim. Without a zero depreciation add on, the cost of depreciation of the parts has to be borne by you. However, with a zero depreciation add on, the insurer takes care of it.
• Protects Loss of Expense: Zero depreciation car insurance helps safeguard your finances by maximising claim amounts. Without the Zero Dep Add-on, you pay the unpaid portion of the claim, which is deducted as depreciation. And, if the damage to your car is considerable, the repair bill will undoubtedly be higher and burn a hole in your pocket.
• Ease of claims: With zero dep add-on, there are no disputes or hassles with claims due to no deduction of depreciation. All in all, it makes the claim settlement process smooth and hassle-free.
• Suitable for new cars: The zero depreciation add-on cover is perfect for new car owners. New cars tend to lose value rapidly during the initial years after purchase due to high depreciation rates. So, the add-on helps new car owners preserve their car’s value during insurance claims in the long run.
• Affordable coverage: Considering the added protection offered by the zero depreciation add-on, the initial cost of including the cover in the car insurance policy seems more than reasonable. By spending a little more, you can get a lot of value out of it.
• Peace of mind: It is normal for car owners to lose their sleep worrying about any potential harm befalling their beloved car and the resulting financial damage. With a zero depreciation add-on, car owners can enjoy peace of mind knowing they will get the maximum claim amount in case their car suffers damage/loss due to an insured peril.
What is Not Covered in a Zero Depreciation Add-on ?
• Zero depreciation add on would not provide any claim for damaged vehicular parts if the accident involved the insured vehicle driven by a driver without a licence or under the influence of drugs or alcohol.
• No payouts under zero depreciation add on will be made for damage due to engine oil, coolant, clutch oil, etc.
• Normal wear and tear or mechanical breakdown are also not covered
• Total loss to your car.
Traditional Car Insurance Vs. Zero Depreciation Car Insurance
| Features | Traditional or Comprehensive Insurance | Zero Depreciation Car Insurance |
| Meaning | It provides coverage for third parties and your car's own damages. |
A zero depreciation cover is an optional add on you can opt for in your comprehensive car insurance policy. This add on in your plan ensures that the insurer won’t charge for your car’s depreciation during claims. |
| Cost of Depreciation | With a comprehensive car insurance policy, you will have to pay for the cost of depreciation of your car’s parts during car insurance claims. |
With zero depreciation insurance, you don’t have to pay for the cost of depreciation during your car insurance claims. |
| Claim Settlement | Claim settlement only happens after deducting car depreciation as per mentioned rates. |
Claim settlement post inclusion of car depreciation. |
| Premium Value | Lower premium value | Higher value compared to traditional coverage |
| Vehicle’s Age | Purchasable for cars less than 15 years of age | Purchasable for cars less than 7 years of age. |
| Cost of Repair | All costs incurred are shareable between customer and insurer | All costs incurred are borne by insurer |
How is Zero Depreciation Insurance Premium Determined?
Zero dep car insurance premium amount is calculated based on the car's age, make, & model of the car, and the location where the car is registered.
- Car's age: The depreciation value of a car is proportional to its age. Therefore, the older the car, the higher will be the premium for zero depreciation add on in car insurance.
- Car's model: The type of car is important for car insurance. Because different models use different sorts of parts, the cost of these parts also varies. As a result, the insurer considers the car model when computing the premium for zero depreciation.
- Location: The premium for zero depreciation will be higher if you reside where road accidents are frequent or prone to natural disasters. The insurer also considers the location where you drive your car while deciding the premium for zero depreciation.
- Insured Declared Value (IDV): The IDV is crucial in determining zero depreciation insurance premiums. When calculating the premium under the IDV, the depreciation is deducted from the insured car's current worth.
- Engine type: You might have to pay more for zero depreciation cover if you drive a car with a higher cubic capacity engine.
- Accessories installation: Install accessories smartly in your vehicle. There is a separate calculation for the zero depreciation premium for additional features and accessories.
- Fuel type: The cost for zero depreciation might be higher depending on whether you drive your car on CNG, diesel, petrol, or an electric car.
Key Points to Remember About Zero Dep Cover
Before you opt for a zero depreciation add-on, below are the key points that need to be considered
● Zero dep car insurance applies for cars below 7 years of age
● Zero dep insurance for a car only protects your car’s component's depreciation value while claim settlement
● Mandatory deduction continues and is not covered under zero dep car insurance
Who Should Opt for a Zero Depreciation Cover?
No matter if you own a new car or an old one, or you are someone who has an expensive sports car, you can opt for a zero depreciation car insurance add-on cover. It will save you from bearing the heavy depreciation costs applied on the parts of the car or the reduced benefit while claiming settlement.
Here is the list of people who should opt for Zero Depreciation Car Insurance:
1. New Car Owners: You must add a zero depreciation add-on cover to the comprehensive insurance policy if you own a new car. By doing so, you can get extensive insurance coverage for your car.
2. Sports Car Owners: Owning a sports car brings incredible thrill and pride. However, since the prices of such cars are expensive, their components are costly too and often difficult to repair and replace. Therefore, sports car owners should buy zero depreciation car insurance.
3. Luxury Car Owners: If you own a luxury car, the cost of repair of its components could create a massive hole in your pocket, even with a standalone own damage car insurance policy. Therefore, luxury car owners must not think twice before opting for a zero depreciation cover for your luxury car.
Factors Affecting Zero Depreciation Premium
Zero dep car insurance premium amount is calculated based on the car's age, make, & model of the car, and the location where the car is registered.
- Car's age: The depreciation value of a car is proportional to its age. Therefore, the older the car, the higher will be the premium for zero depreciation add on in car insurance.
- Car's model: The type of car is important for car insurance. Because different models use different sorts of parts, the cost of these parts also varies. As a result, the insurer considers the car model when computing the premium for zero depreciation.
- Location: The premium for zero depreciation will be higher if you reside where road accidents are frequent or prone to natural disasters. The insurer also considers the location where you drive your car while deciding the premium for zero depreciation.
- Insured Declared Value (IDV): The IDV is crucial in determining zero depreciation insurance premiums. When calculating the premium under the IDV, the depreciation is deducted from the insured car's current worth.
- Engine type: You might have to pay more for zero depreciation cover if you drive a car with a higher cubic capacity engine.
- Accessories installation: Install accessories smartly in your vehicle. There is a separate calculation for the zero depreciation premium for additional features and accessories.
- Fuel type: The cost for zero depreciation might be higher depending on whether you drive your car on CNG, diesel, petrol, or an electric car.
Things to Keep in Mind About the Zero Depreciation Add-on Cover
Before you opt for a zero depreciation add-on, below are the key points that need to be considered
● Zero dep car insurance applies for cars below 7 years of age
● Zero dep insurance for a car only protects your car’s component's depreciation value while claim settlement
● Mandatory deduction continues and is not covered under zero dep car insurance
How to Get Zero Depreciation Car Insurance Online?
Buying a zero dep car insurance policy is easy and smooth. Here’s a step-by-step guide:
Step 1 - Visit the HDFC ERGO website and click on car insurance. Enter the vehicle registration number and proceed by clicking on get a quote.
Step 2 - After clicking on get a quote or proceed without the car number, you will have to enter your car’s make and model.
Step 3 - You must choose a comprehensive insurance plan.
Step 4 - Give details about your last insurance policy- Date of Expiry, No Claim Bonus Earned and Claims Made. Enter your mobile number and email ID.
Step 5 - Customise your plan by selecting zero depreciation add on cover.
Step 6 - Go through the policy and coverage details and proceed to pay the insurance premium online.
After this, a confirmation email will be sent to you with zero depreciation car insurance policy add on detail.
Claim Settlement with Zero Depreciation Car Insurance
In the case of standalone comprehensive car insurance plans, the insurer only reimburses the loss after deducting the depreciation value of the replaced parts. Under this policy, as per the depreciation rate for parts, you will have to pay 50% on nylon, plastic, and rubber parts, including batteries, 30% on fiber components and so on. On the other hand, with zero depreciation add on, you will pay only the standard deductible, which is Rs 1000 on all claims. The insurer will bear the rest expense for repairing damaged parts.
When is the Zero Depreciation Claim declared Null and Void?
Your zero dep claim is considered null and void in the following situation
• If you are caught driving without a driving licence
• If your car has been stolen, and you have lost both the car keys
• If you are driving under drugs or alcoholic intoxication
• If you haven’t filed an FIR after your car was stolen
Other HDFC ERGO Car Insurance Add-ons Available
The more comprehensive is the coverage, the more claim is that you can get. To this end, HDFC ERGO offers a select range of add-ons with its comprehensive car insurance plans. Have a look –
One of the most popular add-ons is zero dep. You get the benefit of the complete claim amount without considering depreciation on the parts of your car in case of an accident and damage to your car.
When you do not file any claim for the entire year, HDFC ERGO offers a reward in the form of discounts.
Imagine, you are going somewhere and your car broke down in the middle of nowhere, HDFC ERGO will help you with 24*7 roadside help by offering mechanical help, towing your car, key, and tyre replacement, refuelling, and so forth.
You can get compensated for the amount spent on the replacement of nuts, bolts, brake oil, AC gas, washers, battery water, etc.
With the RTI add-on cover, you can claim the entire value of your car’s invoice if you met with an accident and your car is totally damaged.
Repairing the engine and gearbox is expensive, however, if you opt for this add-on HDFC ERGO will take care of these expenses.
You get a daily travel allowance under downtime protection if your car is sent in for repair after an accident.
One of the latest and most considerate add-ons is pay-as-you-drive. It is a usage-based add-on where you need to choose a slab for your estimated kilometre coverage based on which the premium is determined.
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Frequently Asked Questions On Zero Depreciation in Car insurance
You end up paying nothing except a few service charges or base deductible as stated in the policy document.
The zero dep cover is slightly costlier than a comprehensive plan. However, this isn’t as expensive as the costs you would have to incur in case of repairs after an accident without such a cover.
Zero dep cover offers coverage against damages on all car parts made from plastic, fiber, wood and metal. It covers the cost of painting and dent repair based on policy norms.
It might not cover costs on tyres and coolants or alignment related services. Please check the policy document.
You can opt for the zero dep add-on before your car turns 5 years old.
Yes, Zero depreciation insurance is beneficial for the insured vehicle as policyholder gets full coverage of car parts without any deduction for depreciation during claim settlemement.
This premium mainly depends on the Insured Declared Value (IDV) of the car. IDV is the maximum amount you can claim against total damage, loss or theft of your car. Thus, IDV, in a nil depreciation insurance policy, plays an integral role. The higher the IDV, the higher the premium towards a zero depreciation add-on cover.
No, you cannot cover a third party car insurance policy into zero depreciation car insurance. You can only purchase this cover with a comprehensive car insurance policy.
Yes, you can transfer bumper to bumper add on cover with the car insurance policy to the new owner, as the nil depreciation policy is for the car and not the owner. However, the registration number of the car should remain the same.
Yes, it is worthy to buy zero depreciation car insurance to get full amount from the insurer during claim settlement. The insurer will only charge standard deductible value and won’t apply depreciation on vehicle’s part while making the payment for the claim.
With our zero depreciation car insurance, we can claim unlimited times.
No. Most insurers don’t include tyres under the coverage of the zero depreciation add-on. This is mainly due to tyres being subject to wear and tear with general usage.
Yes. Bumper-to-bumper cover, just like nil depreciation and zero dep, is another name for the zero depreciation add-on cover in car insurance.
To know whether your car insurance policy has zero dep cover or not, check the policy documents. If it is included, it should be listed as an add-on cover.
Zero-dep add-on doesn’t affect no claim bonus (NCB) in car insurance. With claim-free years, you will still be rewarded with applicable NCB benefits.
No. In general, you can’t add a zero-dep or nil depreciation add-on to your car insurance policy mid-term. To include this add-on, you will have to do so during the time of initial purchase or at policy renewals.
You can be eligible for a zero-dep add-on with your standalone OD or comprehensive car insurance policy if your car is under 5 years old.
Zero depreciation is an optional cover that you can include in your standalone OD or comprehensive car insurance plan as an add-on. Whether to add it to your plan entirely depends on your coverage needs and personal preference. Generally, it is recommended due to its practicality and enhanced protection, especially for new and luxury car owners.
The zero-dep premium depends on multiple factors, such as the make and model of the vehicle, age of the vehicle, geographical location, IDV of the vehicle, engine capacity, etc.
Generally, engine damages are not covered under the bumper-to-bumper car insurance add-on. It is best to opt for the engine and gearbox protection add-on for this purpose.
Most insurers don’t offer the zero depreciation add-on cover for cars older than 5 years. If you are interested in purchasing this add-on, do contact your car insurance provider first.
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