When you file a car insurance claim, the final amount you receive often feels lower than expected. This happens because insurers deduct depreciation on certain parts that need repair or replacement.
To avoid this reduction, many car owners now choose zero depreciation car insurance, an add-on that removes depreciation deductions from claim settlements, leading to higher payouts. But how exactly does this cover change your claim outcome? Let’s break it down.
How Depreciation Affects a Standard Claim?
Every car part loses value over time due to wear and tear. During claim settlement, insurers calculate the current value of damaged parts and apply depreciation rates such as:
- 50% on plastic parts
- 30% on fibre parts
- 0 to 50% on metal parts, depending on the vehicle’s age
This means if a bumper costing ₹12,000 is damaged, a standard policy covers only half of the cost. You end up paying the remaining amount from your pocket.
Many buyers realise this only after filing their first claim, especially when buying car insurance online, where terms are visible but often overlooked. Depreciation is the single biggest reason why claim payouts feel smaller than expected.
What Zero Depreciation Cover Changes?
Zero depreciation cover, often called zero-dep or bumper-to-bumper, removes the depreciation-based deduction. This means the insurer covers the full cost of replacing damaged parts, excluding consumables and mandatory deductibles.
Higher and More Accurate Claim Payouts
After depreciation is removed, the settlement amount closely aligns with the actual repair bill. This drastically reduces your out-of-pocket costs.
Better Coverage for Frequently Damaged Parts
Plastic components like bumpers, trims and headlights are the most vulnerable in accidents. These also carry the highest depreciation rates. Zero-dep ensures that even these parts are covered fully.
Strong Protection for New or Premium Cars
New cars lose value rapidly in their first few years. Luxury or high-end vehicles also have costlier parts. Zero-dep cover helps prevent expensive surprises during repairs.
Ideal for High-Traffic or Daily-Use Drivers
City driving increases the chances of dents, scratches and minor collisions. Zero depreciation cover ensures these smaller but frequent repairs do not become financially burdensome.
Real-Life Claim Scenario: Zero-Dep Vs. Standard Cover
Imagine your car’s bumper and headlight get damaged in a minor accident. The total replacement cost is ₹20,000.
Without Zero-dep:
- Plastic parts depreciate by 50%
- You may receive only ₹10,000
- You pay the remaining ₹10,000 by yourself
With Zero-dep:
- Depreciation is not deducted
- The insurer pays the entire ₹20,000
- You pay only the pre-specified deductible
This difference becomes even more significant when multiple parts are affected.
Limitations to Know Before Choosing Zero Depreciation Car Insurance
Zero-dep is highly beneficial, but it comes with a few conditions:
- Available only for cars typically under 5 years old
- The add-on may allow a limited number of claims per year
- Premium is slightly higher compared to standard coverage
Despite limitations, the higher claim payouts and lower expenses make the add-on valuable for most car owners.
Conclusion
Zero depreciation car insurance significantly improves claim outcomes by covering the full cost of part replacements without depreciation cuts. It is a practical upgrade for anyone who wants predictable repair expenses, especially during the early years of car ownership.
Many insurers, including TATA AIG, offer well-designed zero-dep add-ons that make claim settlements smoother and more financially favourable. You can easily buy car insurance online by visiting their website.
