🚗 Zero Depreciation Car Insurance: 5 Key Reasons It’s Worth the Extra Premium

Car insurance is a must-have in India, but many car owners are caught off guard when their claim amount is reduced due to depreciation. This is where Zero Depreciation Car Insurance comes in.

But is it worth the extra premium? Let’s find out.

✅ What is Zero Depreciation Car Insurance?

Zero Depreciation (or Nil Depreciation) is an add-on cover that ensures no deduction for depreciation on parts during a claim. It means the insurer pays the full cost of the parts replaced — not the depreciated value.

This is particularly useful for:

• New car owners
• Expensive or luxury cars
• Areas prone to accidents or rough driving

👉 According to IRDAI (Insurance Regulatory and Development Authority of India), insurers must clearly disclose add-on cover costs and benefits.

✨ Enter: Zero Depreciation Insurance

Also called bumper-to-bumper insurance, a Zero Depreciation (Zero-Dep) policy ensures you get the full claim amount. There is no deduction for depreciation of car parts. You pay a little more in premium, but save big when you actually file a claim.

💡 Why Is Zero Depreciation Insurance Useful?

Here’s what makes it so valuable:

• ✅ Higher Claim Amount – You receive the full repair cost without deductions
• ✅ Minimal Out-of-Pocket Expenses – Great for expensive spare parts
• ✅ Better Protection for New Cars – Especially helpful in the first 5 years
• ✅ Peace of Mind – Avoid surprise costs during repairs
• ✅ Faster Garage Approval – Garages prefer full coverage policies

🧾 Standard vs. Zero Depreciation: Real-Life Example

Imagine your 1-year-old hatchback gets into a minor accident. The repair costs ₹50,000. If you have standard insurance:

• The insurer may deduct ₹12,000–₹15,000 due to depreciation
• You’ll have to pay this amount from your own pocket

If you have Zero Depreciation cover, you’ll pay nothing or very little. The insurer covers the full ₹50,000. This is except maybe for a small deductible or consumables.

⚠️ What’s Not Covered Under Zero Depreciation?

It doesn’t mean “everything is covered.” There are still some exclusions:

• Engine damage (unless you have Engine Protect add-on)
• Tyres, batteries, and glass may have some deductions
• Drunk driving or driving without a license
• Mechanical breakdown not caused by accident

So while it boosts your claim coverage, it’s not a magic bullet.

📅 Eligibility: Who Should Get Zero Dep Cover?

You should definitely consider it if:

• 🚘 Your car is new (under 5 years old)
• 🚦 You drive in traffic-heavy or accident-prone areas
• 🧑‍💼 You’re a first-time or nervous driver
• 💸 You don’t want to deal with large unexpected repair bills
• 💎 You own a high-end or luxury vehicle

Many insurers don’t offer this add-on once your car is older than 5–7 years.

🧮 Is the Extra Premium Worth It?

The typical cost of Zero Depreciation cover is around ₹2,000 to ₹5,000 annually. This cost depends on your car’s make, model, and age.

Why it’s worth it:

• A single accident can cost ₹20,000+ in out-of-pocket repairs
• One Zero Dep claim can recover 3–5x the add-on cost
• You eliminate depreciation worries for every claim

🧾 Documents Needed to Buy Zero Depreciation Cover

To add Zero Dep to your car insurance, you’ll typically need:

• Vehicle Registration Certificate (RC)
• A valid Driving License
• Previous insurance documents (if any)
• ID proof and address proof

🔎 Best Insurers Offering Zero Dep Insurance in India

Insurance Provider	Zero Dep Cover?	Claim Settlement Ratio (2025)
HDFC ERGO	✅ Yes	99.5%
ICICI Lombard	✅ Yes	98.2%
Bajaj Allianz	✅ Yes	98.1%
Tata AIG	✅ Yes	99.1%
Digit Insurance	✅ Yes	96.5%

(Note: Always verify terms on their official websites)

🛠️ Add-Ons to Combine with Zero Depreciation

Consider pairing Zero Depreciation with these useful add-ons:

Add-on Cover	Benefit
Engine Protect	Covers water or oil leak–related engine damage
Roadside Assistance	Towing, on-spot repairs, fuel delivery
Consumables Cover	Covers nuts, bolts, lubricants, and more
Return to Invoice	Get full car value in case of total loss

📌 Internal Link Suggestion:

👉 HDFC ERGO vs ICICI Lombard: Best Car Insurance Comparison in India

🙋 Frequently Asked Questions (FAQs)

Q1: Is Zero Depreciation cover available for all cars?
No. It’s usually offered only for cars under 5–7 years of age.

Q2: Can I make unlimited claims with Zero Dep?
Some insurers limit Zero Dep claims to 2 per policy year. Check your policy terms.

Q3: Does it increase the No Claim Bonus (NCB)?
No, it doesn’t affect NCB directly. But claiming frequently (even with Zero Dep) may reset your NCB.

Q4: Is it compulsory?
No. It’s optional but highly recommended for new or expensive vehicles.

🧭 Final Thoughts: Is It Worth It?

Yes, Zero Depreciation Car Insurance is worth the extra premium. This is especially true if you’ve just bought a car. It is also beneficial if you simply don’t want financial shocks after an accident.

It gives you peace of mind, better protection, and saves you money when you need it the most.

Last Updated on August 7, 2025 by Singh sumit