We all have heard about Zero Dep Policy but many do not have detailed information about it. Popular term ‘Zero Dep Car Insurance’ is nothing but Zero Depreciation Car Insurance. When we buy a car we pay a price and that is known as the value of the car. As car is a depreciating asset, the value of the car goes down/depreciate every year. Normally insurance companies consider average 30-35% per year depreciation of your car value from the purchase price and provide you cover for the depreciated value of your car. Initial few years will have less depreciation as the car is new but subsequent years it will be high. However, if unfortunately your car meets with accident you have to replace/repair the car with full price of the damaged spare parts. So if you have not opted for Zero Depreciation Car Insurance Policy then you have to pay the differential price of the spare parts which the insurance company is not fully covering. That’s why Zero Dep policy is beneficial.
In case you do not opt for zero dep insurance, then companies normally apply the below depreciation when they settle claims :
- Parts made of Glass – No cover provided.
- Parts made of Fiber glass – 30% depreciation will be considered & claim will be paid accordingly.
- Parts made of plastic, rubber, nylon, synthetic & battery – 50% depreciation will be considered and then the reduced price will be settled.
In short Zero Dep Policy covers total losses/ damages where as other comprehensive policies will not cover all damages. Normally zero dep cover is provided for vehicles of up to 5 years of age, some insurance companies restrict this to 3 years.
While Zero Dep Car Insurance premium will be little expensive compared to the regular comprehensive cover, it is many ways beneficial to opt for your new car and also suggested for renewal as long as your insurance company is ready to provide such cover.
