Zero Depreciation Insurance: Is It a Good Deal?

People look at car insurance from a compliance point of view. But it offers many more benefits than only keeping you on the right side of the law. One of the many benefits of buying car insurance is that you can save in the long term with the help of a little investment. For example, buying Zero Depreciation Add-on. Read on to find out more about this cover:

What Is Depreciation?

Every vehicle undergoes wear and tear due to time. This leads to reduction in the vehicle’s monetary value.. With respect to car insurance, the depreciation is calculated on individual parts such as fiberglass, glass, metal or plastic. At the time of claim, the amount of depreciation is deducted first and then the remaining amount is reimbursed to the policyholder. Depreciation forms a huge chunk of the claim amount and its subtraction leads to a significant loss for the claimant.

The following table denotes the percentage of depreciation calculated at the time of claim:

What Is Zero Depreciation Car Insurance?

Zero Depreciation is a car insurance Add-on. This Add-on is not available to buy with a Third-party Liability Car insurance policy. You can buy Add-ons with a Comprehensive Car Insurance Policy only. Zero Depreciation Add-on offers more benefits over a basic Comprehensive Car Insurance Policy.

One of the major exclusions of a Comprehensive car insurance policy is that the depreciation amount will be deducted from the claim amount. With the help of a Zero Depreciation Add-on, one can receive a higher claim amount as compared to not opting for this Add-on.

Benefits of Buying Zero Depreciation Car Insurance Policy

Every Add-on is specially created to provide additional coverages which can be hand-picked by customers while purchasing comprehensive car insurance. Each of these coverage options has their own set of benefits. Following are the major benefits of a Zero Depreciation Car Insurance Cover:

  • Higher Claim Amount
    As mentioned earlier, every insurer will deduct the amount of depreciation from the claim amount. However, with a Zero Depreciation Cover, the insurance company will not subtract the depreciation from the claim amount and pay a higher claim amount.

  • Less Loss For new cars
    Buying a zero depreciation cover is most sensible for the owners of a new car. Depreciation kicks in as soon as a cars leaves the showroom. When a new car is damaged, the amount of depreciation calculated is more prominent and could be a huge chunk of the claim amount.

Things to Remember Before Buying Zero Depreciation Cover

Before buying Zero Depreciation Add-on it is is advisable that the car owner is aware of the following key points related to this cover:

  • A zero depreciation car insurance cover is available only for a car which is not older than five years of age. Which means only the owners of new cars have the option to buy this cover.

  • Multiple claims can be filed against a basic car insurance policy. However, if you opt for a zero depreciation car insurance cover you can only file two claims in one policy year. The number of claims is capped to two buy most insurers if you buy this cover.

  • You can purchase a zero depreciation car insurance cover only if you own a private car. This cover is not available for the insurance policies of commercial cars.

  • Even though various car parts like – fiberglass, metal, plastic parts, etc. are covered under the zero depreciation cover, it does not cover additional accessories.


Buying Zero Depreciation Car Insurance cover will help you gain a higher claim amount in case of unfortunate events. Thus, opting for Zero Depreciation cover is any time a good deal as compared to a basic Comprehensive car insurance policy.

Author: Eddy

Eddy is the editorial columnist in Business Fundas, and oversees partner relationships. He posts articles of partners on various topics related to strategy, marketing, supply chain, technology management, social media, e-business, finance, economics and operations management. The articles posted are copyrighted under a Creative Commons unported license 4.0. To contact him, please direct your emails to