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 a car affects its claim settlement and hence affects 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 add-on 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 %



Wooden Parts

5 – 1st year

10 – 2nd year

So, on

Fibre Parts


Vehicle age less than 6 months


Vehicle age 6 months to one year


Vehicle age one to two years


Vehicle age two to three years


Vehicle age three to four years


Vehicle age four to five years


Vehicle age more than five years

Not applicable

Metallic parts less than 6 months


Metallic parts 6 months to one year


Metallic parts one to two years


Metallic parts two to three years


Metallic parts three to four years


Metallic parts four to five years


Metallic parts five to ten years


Metallic parts more than ten years



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 cars 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 the age of seven years. However, there is no general rule fixed on limitation of such cover. It is always based on the 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.


Selecting the zero depreciation add-on coverage can significantly impact three vital aspects of your car insurance policy. Firstly, it enhances the coverage of your car insurance, providing you with broader protection. With this add-on, you won't need to worry about depreciation calculations when filing a claim, which is the second advantage. As a result, you can claim the full amount for repairs, ensuring a hassle-free claim process. Lastly, it's important to note that while the premium may increase with this enhanced coverage, it's a small price to pay for the extensive protection it offers compared to a standard comprehensive car insurance policy.

It's worth mentioning that the zero depreciation add-on is applicable for vehicles up to five years old. Beyond this point, the insured will be responsible for any repair costs that take depreciation into account during the claim settlement process. This add-on can be a game-changer for car owners looking for peace of mind and comprehensive coverage, particularly for newer vehicles.

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-depreciation add-on cover available only for new cars?

No, the zero-depreciation add-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 cars 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-depreciation add-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 cars up to the 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. Zero-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.

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