WHAT HAPPENS TO ZERO DEPRECIATION CAR INSURANCE COVER AFTER 5 YEARS

Introduction

As a car ages, the worth of the car starts depreciating due to the wear and tear with passage of time. Simply put, it loses its value. Now, in case of an unfortunate incident, the insurer will only provide compensation on the repair bill after deducting the depreciation amount of the car parts. So, depreciation of car affects its claim settlement and hence affect your finances to pay for the remaining bill on your own. However, such deduction can also be covered for settlement by opting for zero depreciation car insurance or nil depreciation or bumper to bumper car insurance along with your basic comprehensive cover.

Remember, a zero depreciation addon cover is only applicable for cars less than five years old. A zero depreciation covers for the cost of your car’s part depreciation during claim settlement and does not cover for your compulsory deductibles while it cannot be opted for cars more than five years of age. Let’s take a look at zero-depreciation add-on cover and its intricacies in detail.

 

Calculation of car depreciation

Depreciation rates are calculated and fixed by the IRDAI - Insurance Regulatory and Development Authority of India as below;

Car parts/ age	Depreciation rate in %
Rubber/Plastic/Nylon/Batteries	50
Wooden Parts	5 – 1st year 10 – 2nd year So, on
Fibre Parts	30
Vehicle age less than 6 months	5
Vehicle age 6 months to one year	15
Vehicle age one to two years	20
Vehicle age two to three years	30
Vehicle age three to four years	40
Vehicle age four to five years	50
Vehicle age more than five years	Not applicable
Metallic parts less than 6 months	Nil
Metallic parts 6 months to one year	5
Metallic parts one to two years	10
Metallic parts two to three years	15
Metallic parts three to four years	25
Metallic parts four to five years	35
Metallic parts five to ten years	40
Metallic parts more than ten years	50

 

Benefits of zero depreciation cover

Apart from being advantageous on the finances, zero depreciation cover carries more benefits with your car insurance like;

• Increase in the claim amount
• Wear and tear factor eliminated in settlement
• Affordable Add-on cover
• Coverage for all cars below five years of age
• Covers for all repair costs except total loss and consumables cost
• Peace of mind

A zero-depreciation add-on cover provides additional protection to car and gives the benefit of increased claim settlement largely depending on the location, age and model of your car. It only eliminates certain repair costs like in case of accident due to drunk driving, under drugs intoxication or mechanical breakdown.

 

What happens to zero depreciation car insurance cover after five years in India?

Generally, the zero-depreciation add-on is no longer applicable after the age of the car passes five years. Though some insurers do offer the benefit for up to age of seven years. However, there is no general rule fixed on limitation of such cover. It is always bases on insurer, the policy chosen and extension allowed, if any. So, you need to check with your insurance company while opting for a zero-depreciation add-on cover to see its duration, renewal, benefits, limitations, terms and further conditions.

 

Conclusion

Opting for zero depreciation add-on coverage majorly affects three components of your car insurance namely the coverage of your car insurance policy will increase, next you can claim additional as depreciation will not be calculated and finally the premium will increase as this shield in car insurance offers more coverage than a standard comprehensive car insurance policy. Such a cover is applicable only till the car’s age is five years, post which any repair costs after calculating depreciation have to be borne by the insured during the time of claim settlement.

 

FAQs – Frequently asked questions.

Let's take a look at some frequent queries on zero depreciation car insurance cover after five years;

 

Q1. Can zero depreciation car insurance cover be transferred to another owner?

Yes, zero depreciation or nil cover is transferable to any new owner of the car. As the insurance policy is on the car, the car registration number should be valid.

 

Q2. Is the zero-depreciationadd-on cover available only for new cars?

No, the zero-depreciationadd-on cover is available for all cars that are less than five years old. Some insurers do have an option to provide this add-on for car aged slightly more than five years old like till seven years. It all depends on the insurer, policy chosen and facets of the car.

 

Q3. Is the zero-depreciationadd-on cover a better option to comprehensive car insurance?

Yes, a zero-depreciation add-on cover adds benefits to a basic comprehensive car insurance policy. It increases the claim amount by paying for the repair and depreciation costs. However, it is only applicable to car up to age of five years.

 

Q4. Is there a limit on the number of claims for the policy with a zero-depreciation add-on cover?

No, there is no limit to the number of claims for the policy with a zero-depreciation add-on cover. Azero-depreciation add-on cover guarantees that during a claim settlement, you get the whole claim amount without deducting or accounting for the depreciation of your car.