What Is zero depreciation in car insurance?
zero depreciation insurance
What is zero depreciation cover?
A zero depreciation add-on ensures that the insurer does not account for depreciation and pays the full invoice value in the event of a claim. However, this rider can be purchased only with comprehensive or standalone damage cover. It is not available with third-party liability cover.
Depreciation chart by IRDAI
According to the IRDAI, the rate of depreciation is as follows:
Rate of Depreciation
Less than 6 months
Nil
Between 6 months and a year
5%
Between a 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%
Above 10 years
50%
<div data-placement=«Mid Article Thumbnails» data-target_type=«mix» data-mode=«thumbnails-mid» style=«min-height:400px; margin-bottom:12px;» class=«wdt-taboola» id=«taboola-mid-article-thumbnails-111079467»>
How does zero depreciation cover work?
Assume you have comprehensive car insurance online without zero depreciation coverage. Your car is three years old. One day, while driving down a narrow lane, your vehicle collides with a pole, causing substantial damage to your car’s body.
You request quick towing assistance and take your car to a nearby garage. The service centre repairs the four-wheeler and bills you Rs 60,000.
Considering the car's age, the depreciation rate set by the IRDAI is 30%. The insurance provider will settle the claim after deducting Rs 18,000 (60,000 × 30%), resulting in a final claim amount of Rs 42,000. But if you have a zero depreciation cover, the entire bill will be settled at once.
Factors affecting zero depreciation cover premium
Some significant factors that impact the premium of a zero
Read more on economictimes.indiatimes.com
