A zero depreciation cover ensures that in case of an accident, you will receive the full claim without any deduction for depreciation on the value of the parts replaced.
In normal insurance policy, while making a claim the insurance company makes a deduction for depreciation. This depreciation amount is different for different parts ranging from 0 to 50%.
In zero depreciation cover the company does not deduct the depreciation amount while paying the claim. This is available as an add-on. So a person has to pay higher premium.
This add-on is generally available for first 2-3 years of purchase of car and for private cars only.
Companies generally allow only 2 claims considering zero debt in a year. Afterwards all claims are considered as normal insurance.
Besides providing zero depreciation, some insurers also ensure that the policyholder does not lose his no-claim bonus.
There are few conditions which are not covered under the zero depreciation policy.
- Wear and tear
- Damage to uninsured items like accessories and bi-fuel/gas kit, tyres
- Damage due to uninsured peril
- Damage due to mechanical breakdown
Some insurers which provide depreciation cover include Tata AIG General, Bharti AXA General, ICICI Lombard General, Reliance General and HDFC Ergo General.