From many add-on covers, one of the important add-on covers is the Zero depreciation. Actually, depreciation is nothing but the value of the car and its parts reduces due to regular wear and tear, over the course of time and usage. This reduces the amount during the claim. Ultimately, this depreciation is directly related to the age of the car. So, when your car is met with an unfortunate accident and when you make a claim you would not receive a whole amount for the repaired parts. This is because the insurer pays the repair bill after deducting the depreciation amount of the car parts. Here, you have to pay your remaining repair bill from your own pocket. This is where Zero Depreciation or Nil Depreciation comes to the rescue.
Zero Depreciation is an add-on cover that does not deduct the depreciation amount of the car and the claim is made full where you need not pay any amount from your own pocket. It is also known as Zero Depreciation or Nil depreciation or Depreciation reimbursement or Bumper to Bumper cover in car insurance which will pay the entire amount as said before during any unfortunate accident and that the whole compensation amount is settled.
A Comprehensive Motor Insurance policy along with Zero Depreciation cover pays for the damages for your car without considering the factors of depreciation. You also need to know that this add-on does not cover normal wear and tear or mechanical breakdown but covers expenses incurred due to the damages to paint rubber and plastic parts, batteries, tires, etc.
You can get this add-on cover when you purchase your Car Insurance or while renewing your car insurance. This add-on cover is applicable only for 2 times in a policy period and thus you have to choose your Nil depreciation wisely during any claim. Zero Depreciation add-on cover is extremely useful for people who have just started to drive, who has just bought a new car, who has an expensive car, etc.
How is Depreciation Calculated?
Below is the rate of depreciation of all car parts approved by the IRDAI:
| Subject to a deduction for depreciation at the rates mentioned below in respect of the parts replaced | |
| For All Rubber/ Nylon/ Plastic Parts, tires, tubes and batteries | 50% |
| For Fibreglass components | 30% |
| For All Parts made of Glass | Nil |
Below is the rate of depreciation for all parts of the car:
| AGE OF VEHICLE | % OF DEPRECIATION |
| Not exceeding 6 months | Nil |
| Exceeding 6 months but not exceeding 1 year | 5% |
| Exceeding 1 year but not exceeding 2 years | 10% |
| Exceeding 2 years but not exceeding 3 years | 15% |
| Exceeding 3 years but not exceeding 4 years | 25% |
| Exceeding 4 years but not exceeding 5 years | 35% |
| Exceeding 5 years but not exceeding 10 years | 40% |
| Exceeding 10 years | 50% |
So it is suggested to choose the Zero Depreciation (Bumper to Bumper) or Nil depreciation add-on for your vehicle insurance to get the whole amount while claiming.
