When you come across someone saying, ‘Bumper-to-Bumper cover’ or ‘Zero Dep’ or ‘Nil Depreciation’, they are actually referring to nothing else but a zero depreciation policy.
It could be your insurance agent, your friend, your colleague, or your neighbor who have recommended you to buy a Zero Dep policy. But is it valuable enough for your car? Let’s find out with this article.
What is Zero Depreciation?
Depreciation means reduction in the total value of any asset in use. In our case, this asset is the car you may be planning to get insured.
A zero depreciation policy (or Bumper to Bumper policy), as the name suggests, is a comprehensive car insurance policy with a zero depreciation add-on. This policy provides complete protection without considering the depreciation of your vehicle during a claim settlement.
How is a Zero Dep policy different?
Let’s take an example here:
Our friend Rahul’s car gets damaged in an accident. When he takes it to the garage, the garage slaps a repair bill of Rs. 1,20,000. Rahul is obviously frustrated. Why would he not be? Although his car was insured with a comprehensive car insurance, the policy helped him settle his claim with Rs. 90,000 only, post depreciation of the damaged parts.
The depreciation percentage is as below in respect of the parts replaced:
For Metal – 10% depending on the age of the vehicle maximum upto 50%
For Plastic parts/rubber/nylon, tyre and tubes, batteries and air bags – 50%
For Fibre glass components – 30%
Had he bought a valuable add-on of Zero Depreciation, he could have still saved Rs. 26,500.
The break-up is as follows:
Compulsory deductible – Rs. 1,000 (depending upon engine cubic capacity)
Consumables – Rs. 2,500
Anyone can get jitters while paying for such hefty bills.
If your car meets with an accident, the claim settlement would be considered depending on the terms and conditions of the policy along with the coverage opted for.
However, if you go for a Zero Depreciation car insurance policy there would be no depreciation applied on the damaged parts, however there are a few exceptions when a damaged part is completely replaced.
What affects the Zero Dep premium?
A zero depreciation is an add-on feature that does not come along with your standard comprehensive policy. A comprehensive car insurance provides coverage against third-party liability as well as damages to your own car and self.
By paying a little extra, you can protect your car bumper-to-bumper.
Zero Depreciation policy mainly depends upon the age of the car. Few private sector companies offer zero depreciation till 5 years of the age of the car. However there are a few public sector companies in the market who also offer zero depreciation till 10 years of the age of the car.
Myth or Fact – Is Zero Depreciation applicable to new cars?
Yes it is always recommended that if you own a new car, you opt for zero dep policy since there are a lot of emotional values attached. As you take care of your new car like a newborn baby!
Are there any limitations on the number of claims?
Ideally, during a policy period, you can make as many claims as you want on your insurance policy, provided the nature of your claim is completely genuine. However, the more claims you make in a one year, the more you project yourself as a ‘risk-profile’ to the insurance company. This in turn means that your claims may be rejected in future.
With a zero-depreciation add-on policy, you can make a maximum of TWO claims in a policy period, wherein the maximum coverage will be offered to you. Make a third claim in the same policy period, and you’d have to bear some expenses from your own pocket.
Hence you may have to speak to your Insurer before opting a Zero Dep policy.
What is not covered?
Zero Depreciation does not cover anything and everything.
Let’s have a look into the conditions that are not covered under the Zero Depreciation plan:
● Damage due to mechanical breakdown.
● Wear and tear
● Damage to accessories, fuel kit, tyres, engine etc.
Remember: Like any other insurance plan, the period of zero depreciation policy is one year, hence it has to be renewed annually.
Finally, Zero Depreciation – Valuable or Not?
If you have a brand new car, it is advisable to buy a Zero Dep cover in order to protect yourself from the risk of paying for most kinds of damages to your car. Sometimes even the most experienced and careful drivers get involved in a mishap usually because of someone else’s mistake.
Therefore, all consumers should give a thumbs-up for this magic add-on that would come to your rescue in the hour of need.