All You Need To Know About Zero Depreciation Add On Cover In Car Insurance – Forbes

April 13, 2022 by No Comments

According to the Motor Vehicles Act, 1988, all car owners in India must have valid car insurance. A comprehensive car insurance policy safeguards car owners during accidental repairs or mishaps. With the rise in road accidents and increased sales of luxury or sports cars, choosing an insurance policy that offers comprehensive coverage is recommended. Zero depreciation add-on cover in car insurance ensures complete coverage, negating the impact of depreciation.

What is Depreciation?

Depreciation refers to the devaluation of an asset due to natural wear and tear, age, usage and obsolescence. Like every other asset, cars also depreciate with time. Additionally, all the materials used in a vehicle like glass, plastic, and metal are subject to depreciation.

The Insurance Regulatory and Development Authority of India (IRDAI) has prescribed the depreciation rate for all vehicles in India. Based on the age of the car, the accumulation of depreciation ranges from 5% during 0 to six months to 50% for vehicles above 10 years of age.

At the time of the accident, general insurance companies pay for the value of parts impacted due to the accident after deducting the depreciation. The insured has to bear the loss of the difference between the market value and depreciated value. But in the case of zero depreciation add-on cover, car owners can get the entire amount of the  damaged parts of the car which are being replaced without subtracting the amount of depreciation.

Choosing a zero depreciation add-on cover is highly recommended for maximum coverage.

What is Zero Depreciation Add-On Cover in Car Insurance?

Zero depreciation is a popular add-on cover to ensure comprehensive car insurance coverage without the impact of depreciation. Under zero depreciation add-on cover, the liability to bear the depreciation cost of parts in case of replacement due to accident is transferred from the insured to the insurance company in exchange for a nominal premium. 

A zero depreciation add on cover enhances the car owners’ financial protection by negating the impact of depreciation.

Benefits of Zero Depreciation Add-on Cover

An extensive zero depreciation add-on cover offers numerous benefits and ensures financial protection. Here are some benefits:

  1. Enhanced Coverage

Opting for zero depreciation car insurance offers enhanced coverage and financial protection in times of crisis like car accidents. In such instances, the car owner is relieved from the burden of bearing depreciation in case of replacement of car parts damaged due to an accident.

  1. Reduce car owners’ cash expenses

It is important to note that a comprehensive insurance plan will also not offer a total claim of expenses on repairs or car components. The claim amount is reduced on account of the depreciation based on the age of the car. Hence, taking a zero depreciation add-on cover enables payment of full cost of parts replaced which are damaged due to accident without deducting the depreciation amount, reducing the policyholder’s expenses in the event of a claim.

  1. Peace of Mind

Families invest a large sum of their savings in buying a car. Complete financial security of the car against any damages including depreciation through a zero depreciation add-on cover enables car owners to have peace of mind to enjoy their cherished investments.

How To Get Zero Depreciation Add-On Cover 

Zero depreciation add-on cover is a cover that you can choose as an add on to your existing car …….

Source: https://www.forbes.com/advisor/in/car-insurance/all-you-need-to-know-about-zero-depreciation-add-on-cover-in-car-insurance/

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