We all know that, once your car come out of the showroom, the price of the same will start decreasing with every single day. The gradual reduction in the market value of a car is known as depreciation. Depreciation is basically about the decrease in the value of the car with the growing time.
Well, the depreciation is not directly associated with the car. The same is linked with several non-durable things such as metal, plastic, glass, fiber, and others. Such materials carry different depreciation rate. Thus, such a rate of degradation associated with these materials reflects the complete depreciation of a car.
Earlier, you may have not taken this into consideration and you will understand its importance at the time of filing claim. Ths insurance company always check the damages sustained by the car and the depreciation value depends upon it. Even after owning a great insurance policy by a reputed insurance company, you still have to face the depreciation cost at the time of claim.
What is Zero Depreciation Cover?
To deal with the depreciation, it is always wise to go for zero dep car insurance policy. Under the same, you will get an add-on the benefit that will enhance the basic car insurance policy. With such add-on benefits, you don’t have to face any kind of depreciation in your policy.
In the same, the insurance company will not subtract the depreciation value at the time of claim. Zero Depreciation cover is also popular by the name of Nil Depreciation.
Difference between an Insurance with Zero Depreciation and a Normal Cover
Let’s take an example to understand the difference:
Normal Insurance Cover:
Let us assume that the cost associated with your car is around Rs. 10,000 and you want to file the claim against this amount. At the time of processing the claim, the insurance company will first look for the depreciation amount that is associated with the damages and will calculate the amount accordingly. Suppose the insurance company calculated the depreciation rate as 20%. Therefore, the amount the claim amount will be around Rs. 8000.
Zero Depreciation Cover:
With a Zero Depreciation car insurance policy, the depreciation amount will not be taken into consideration, so the insured person will get the entire amount of Rs. 10,000.
Now it is completely up to you that you would go for a zero dep cover or the normal one. If you found it difficult in choosing the right one then you can take help of an online insurance web aggregator like PolicyX. It will help you with free quotes that will assist you in choosing the best one.
Benefits of having a Zero Depreciation Cover
You have to pay very less from your pocket at the time of repairs as the company will be liable to offer complete coverage.
It will enhance the basic cover and offers wider coverage.
Factors to Consider before Buying a Zero Depreciation Cover
There are a few things that you have to look for cover while buying a Zero-Dep add-on.
- Cost of Policy – As it plans to come out with complete coverage without considering any depreciation, so it will surely cost a little high as compared to the basic comprehensive insurance policy.
- Best-Suited for – The Zero Depreciation cover is only applicable to new cars of up to five years old. If you own a car which is older then you must ask insurer about the same.
Calculation of the Rate of Depreciation:
Insurance Regulatory and Development Authority of India has designed a specific rate-chart for determining the depreciation value.
- For plastic, Nylon, and Rubber Parts – 50% depreciation is to be deducted.
- For Fiberglass Components – 30% depreciation is deducted.
- For wooden and Metallic Parts – Depreciation will get subtracted according to the age of the car. For a 1st year – 5%, for 2nd year – 10% and so on.
Well, in my view, it is always advisable to go for a zero dep cover rill you can avail its features. There are multiple options that you can explore to just choose the right one according to your needs.