Zero Depreciation Car Insurance Meaning
Depreciation refers to the reduction in the asset value of a car over time due to factors such as age, wear and tear, and disuse. All types of vehicles depreciate the property in general. For example, the cost of a new car is higher than that of an old car. Similarly, all types of things used in a car like glass, plastic, metal, tires etc. have depreciation associated with them after a certain period of time. Depreciation rate of each material is different.
A Zero Depreciation/Nil Depreciation Car Insurance Cover helps the car owner to protect his car against the cost of all kinds of physical damage caused to the car irrespective of the depreciation factor of the car. In Zero Depreciation/Nil Depreciation Car Insurance Cover policy, the insurance company pays the entire claim amount to the car owner without considering the depreciation of the car.
A normal car insurance policy provides compensation to the car owner for damages caused to his insured damaged car after deducting depreciation. Whereas a car insurance policy with Zero Depreciation/Nil Depreciation Car Insurance Cover provides the full amount of compensation to the car owner.
Zero Depreciation/Nil Depreciation Car Insurance Cover is a type of add-on cover. For this the car owner has to pay additional premium. You can add this add-on cover for your new car and you can opt for it again at the time of policy renewal. Therefore, you must take a zero depreciation car insurance policy as it can help in reducing the burden on your pocket in case of any emergency.
Benefits Of Zero Depreciation Car Insurance Cover
- Through Zero Depreciation/Nil Depreciation Car Insurance Cover, you can avoid additional expenses on your damaged car as the depreciation cost is deducted by the insurance company while paying the car insurance amount. Therefore, the car owner has to pay this depreciation cost from his own pocket.
- In a zero depreciation car insurance policy, the claims made in respect of various parts of the car are settled by the insurance company irrespective of the depreciation amount.
- It adds extra value to a car insurance coverage which provides you with additional benefits. If your car gets damaged due to any reason then you do not have to bear any additional cost for the vehicle.
- Zero Depreciation Car Insurance Cover is available to you at a very low premium. You can fully protect your car by paying a small additional premium.
Zero Depreciation Cover Vs Normal Car Cover
Now we will compare Zero Depreciation Car Insurance with a normal car insurance cover. We will try to understand how a zero depreciation is different from a normal car insurance cover. So let’s know more about this.
- Value Considerations at the Time of Claim Settlement :
In Zero Depreciation Car Insurance, depreciation is not taken into account at the time of claim settlement and full compensation is provided to the insurance holder whereas in case of a normal car insurance cover, the car insurance amount is provided only after deducting depreciation.
- Premium :
A lower premium has to be paid for a normal car insurance cover whereas an additional premium has to be paid for a Zero Depreciation Car Insurance cover, which is an addon cover . This premium is higher than the premium for a normal car insurance cover.
- Repairing Cost :
In case of zero depreciation cover, the cost of repairing all types of parts of the damaged car is borne by the insurance company whereas in case of normal car insurance cover, some of the cost has to be borne by the car owner.
- Age of the car :
Generally zero depreciation car cover is for new cars while a normal car insurance cover can be taken for cars that are more than 3 years old.
- Fixed Number of Claims:
Car owners can make only a certain number of claims under Zero Depreciation Car Insurance. While there is no such limit in a normal car insurance.
Who Should Buy Zero Depreciation Cover ?
- new car owner,
- luxury car owner
- Owner of a car with expensive spare parts,
- new or inexperienced drivers,
- Car owners living in accident prone areas.