Claiming Zero Depreciation Car Insurance? Here’s How

Typically, the concept of depreciation is known as the decrease in your car’s value over time due to its gradual wear and tear. As your car gets older, this depreciation becomes more significant. This becomes a pain point, usually when you are claiming your insurance. To put it in simple terms, when your insurance claims get verified, the insurance company takes into consideration the car’s current market value and depreciation or the IDV in car insurance, leading to a smaller payout. You can safeguard yourself with insurance coverage to tackle such an inconvenience effectively. One option worth highlighting is the Zero Depreciation Car Insurance. This car insurance plan guarantees that the insurer doesn’t factor in the reduction in the value of damaged car parts caused by wear and tear when they settle your claims.

Settling your Zero Depreciation Cover

Before you make a claim, look at the policy’s terms that outline the depreciation applicable to different parts of your car. You’ll generally need to handle 50% depreciation for things like nylon, plastic, rubber parts, and batteries. Fiberglass components will undergo a 30% depreciation, while wooden parts will experience 5-10%. However, if you have this add-on car insurance plan, you will receive the maximum sum insured if your car gets stolen or reaches a state where it is beyond repair.

Depreciation Percentage as per Zero Depreciation Cover

Vehicles that are less than six months old have 5% depreciation. As a vehicle’s age increases, depreciation becomes more noticeable. For example, if a vehicle is between six months and one year old, the depreciation rate is 10%. Similarly, if a vehicle falls within the one to two years age range, the depreciation rate is 20%. This pattern continues with subsequent intervals: 

• 30% for vehicles aged between two and three years
• 40% for those aged between three and four years
• 50% for vehicles between four and five years old. 

Insurers decide the IDV for vehicles older than 5 years.

Inclusions of Zero Depreciation Coverage

The following are some of the inclusions of the policy —

• If your vehicle experiences damage due to events like landslides, earthquakes, or floods or gets damaged by incidents like terrorist attacks, riots, or vandalism, the Zero Depreciation Car Insurance will provide coverage.
• If your car undergoes damage in an accident, the zero depreciation add-on will offer you assistance.
• If your car is in transit between locations and encounters damage during the journey, the zero depreciation policy will cover it.

Exclusions of Zero Depreciation Coverage

The following are some of the exclusions of the policy: 

• Any claims won’t be taken into account, especially if the policy for your car insurance plan has expired.
• If the insurer cannot assess the damage to your vehicle before repairs, the insurance company won’t be responsible for processing the claim.
• Claims won’t get resolved if the loss gets covered by a different type of insurance policy. 
• If you submit a claim more than 30 days after the loss or damage, the insurer won’t consider the claim.
• Damage to the engine owing to oil leakage or water ingression won’t receive coverage for depreciation from the insurer.
• You cannot claim any costs to repair parts, sub-parts, or accessories in your vehicle that aren’t approved under your car insurance policy.

Comprehensive Coverage: With and Without Zero Depreciation Cover

This section is a simple explanation of what happens when you have or don’t have zero depreciation cover along with your comprehensive coverage.

• Opting for a comprehensive policy with zero depreciation means the premium is slightly higher than a regular plan, but the benefits are considerably higher. Conversely, a comprehensive policy without zero depreciation car insurance comes with a lower premium but takes into account depreciation during claim settlements, resulting in reduced claim amounts, especially for repairs involving body parts.
• Selecting a comprehensive policy with zero depreciation leads to higher claim settlements, as depreciation doesn’t get factored into the calculations. On the other hand, if you decide on a comprehensive policy without this feature, you’ll receive lower claim payouts because depreciation gets considered for repairs related to body parts, even including a 50% depreciation on plastic components.
• The approach to plastic parts repairs also differs based on your choice. With the zero depreciation add-on, you ensure that repair expenses for plastic parts don’t account for any depreciation. However, without this add-on, a 50% depreciation on plastic parts is considered during claim settlements.
• Additionally, the age of your covered car plays a significant role. If you do not have zero depreciation coverage, your car’s age increases depreciation rates that your policy won’t cover. This situation could result in higher out-of-pocket expenses as your vehicle ages.

The Bottom Line

In conclusion, understanding the nuances of a car insurance plan with zero depreciation can significantly impact your claims process. Depreciation, the natural decline in your vehicle’s value over time, can lead to reduced payouts during insurance claims, especially as your car ages. To address this, zero depreciation car insurance stands as a valuable solution. This add-on ensures that depreciation doesn’t get factored in, resulting in higher claim settlements. However, there are exclusions to consider. For example, claims submitted after 30 days and items not approved under your policy won’t receive coverage. When weighing comprehensive policies with or without zero depreciation, remember that while the former comes with a slightly higher premium, it offers substantial benefits by excluding depreciation from calculations. This ensures that you receive the maximum payout when the time comes to settle claims.