Is Zero Depreciation Cover Worth It in Car Insurance? Pros & Cons Explained

There has been a significant increase in car repair costs over the past few years, largely due to external factors such as the high cost of labour and spare parts. It implies that a small accident can easily create a hole in your pocket if you have not chosen your motor insurance add-ons correctly. People often tend to ignore how depreciation would impact the eventual claim. This is a critical mistake as your insurer would deduct wear and tear on your vehicle parts, and any differential shall be paid out of your pocket.

This is where the role of the zero depreciation add-on comes into play. This is a popular addition to motor insurance policies that ensures that you receive complete reimbursement for replaced parts without accounting for depreciation. However, choosing this option is subject to availability (up to a certain age of your vehicle), and it also increases your insurance premium. Let us find out whether this add-on is really worthwhile to include in your motor insurance policy.

What Is Zero Depreciation Cover?

Let us understand what a zero depreciation cover or add-on is. This add-on is also known as ‘nil depreciation’ or ‘bumper-to-bumper’ cover. It ensures that no depreciation is deducted from the cost of replaced car parts during a claim. Normally, when you file a claim, insurers apply depreciation rates on parts like plastic, rubber, and fibre, reducing the claim payout. However, with Zero Dep, you receive reimbursement for the full replacement cost.

It is particularly useful if you have a high-end car where replacement costs are higher. The add-on usually covers fibre parts, plastic components, rubber items, and metal panels. However, it is not available after the car is 5 years old and has a cap on the total number of claims in a period.

Is Zero Dep Cover Worth Paying Extra?

If you have a standard comprehensive vehicle insurance coverage, the parts of the vehicle shall be subject to depreciation prescribed by the IRDAI. The rate of depreciation is 50% per annum for plastic, rubber, and nylon parts, 30% per annum for fiberglass parts, and for metal parts, it is calculated based on the vehicle’s age, ranging from 5% to 50%.

For people with older vehicles (more than 5 years) and those who are extremely careful while driving, and seldom meet any accidents, this would not make sense. Furthermore, for extremely budget-conscious car owners, spending up to ₹ 5,000 might be a significant expense, and hence, this add-on might be dropped.

• However, here is when spending the extra bit of money is worthwhile:

• If you have a high-end or luxury car, or if your vehicle has not completed five years.

• If you drive a lot during the day, the chances of dents and accidents are higher.

• If you drive mostly in urban and congested regions, your likelihood of making a claim is higher.

• If you value your car and wish to retain it for a longer period.

You wish to cover all the risks and look for complete peace of mind.

FAQs

Is Zero Depreciation Cover available for cars older than 5 years?

Most insurers offer it only for cars up to 5 years old. However, some may extend it to 7 years with conditions or a higher premium.

Does Zero Depreciation mean 100% claim settlement?

Not exactly. It removes depreciation on parts, but deductibles, consumables, and policy exclusions still apply.

Can I add Zero Dep Cover mid-policy?

Generally, no. It's only available at the time of purchase or during policy renewal.

Does Zero Dep increase my car’s IDV?

No, it only enhances your claim payout by avoiding depreciation. IDV is calculated separately.

Is Zero Depreciation useful for small claims?

Yes, especially when replacing expensive parts like bumpers, mirrors, or headlights, where depreciation hits hardest.