Finance Desk, Delhi Magazine: Every car owner can take advantage of zero depreciation as an added perk (add-on) by paying a higher/additional premium. Standard/comprehensive no-frills insurance policies typically do not cover zero depreciation.
Every insurance provider determines the amount payable (with reference to the damaged section of the car) to settle an insurance claim by computing and applying the depreciation rate. The insured/car owner must pay the price differential between the new part’s market value and the portion that has depreciated.
When you file an insurance claim for damage or loss to your car, the insurer pays the whole amount without taking into account or counting the depreciation of the vehicle. This is known as a zero depreciation add-on.
Customers who want future claim settlements to be simple and worry-free find zero depreciation to be an appealing idea. Purchasing an add-on for a brand-new car is unquestionably a wise decision, so long as the owner can afford the higher cost.
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Lets understand the benefits of zero dep insurance in detail.
1) Covers full cost of repairs: With zero depreciation cover, the insurance company will pay for the full cost of repairs or replacement of damaged car parts, without factoring in depreciation.
In a standard car insurance policy, the insurer deducts a certain amount for depreciation of the car parts at the time of claim settlement. This means that you may have to pay a significant amount out of your own pocket, especially if the car parts are expensive.
With zero dep car insurance, you can avoid this deduction and get the full cost of repairs or replacement of damaged car parts. This can be particularly useful if you have a new car or a car with expensive parts, as the cost of repairs can be high.
2) Covers expensive parts: In a regular car insurance policy, the insurer takes into account the depreciation of car parts at the time of claim settlement, and the amount you receive may be less than the cost of replacing the parts. This can be particularly expensive if your car has expensive spare parts.
With zero depreciation cover, the insurer pays for the full cost of repairs or replacement of damaged car parts, without considering the depreciation of the parts. This can be particularly helpful if you have a car with expensive spare parts, as the cost of repairs can be high.
However, it’s important to keep in mind that zero depreciation cover may come with higher premiums and may have certain limitations and exclusions.
3) Protects your new car: When you purchase a new car, the car parts are usually in good condition and have not yet undergone much wear and tear. However, in case of an accident or damage to the car, the insurer may take into account the depreciation of the car parts at the time of claim settlement, and the amount you receive may be less than the cost of replacing the parts. This can be particularly expensive for a new car.
With zero depreciation cover, the insurer pays for the full cost of repairs or replacement of damaged car parts, without considering the depreciation of the parts. This means that if your new car gets damaged, you can get the car repaired without worrying about the high cost of replacing new and expensive parts.
4) No out of pocket expenses: Zero depreciation car insurance ensures that you don’t have to pay any out-of-pocket expenses for the repairs of your car in case of an accident. In a regular car insurance policy, the claim amount is calculated after deducting the depreciation value of the car’s parts from the total claim amount.
However, in zero dep car insurance, the depreciation value is not considered, and the insurer covers the full cost of the repairs, including the expensive spare parts. This means that you don’t have to pay anything out of your pocket for the repairs, and the insurer takes care of the entire cost.
5) Peace of mind: Zero dep car insurance provides peace of mind to car owners. With this type of insurance, you can be assured that in case of any damage to your car due to an accident, you will not have to bear the expenses of repairs out of your pocket. This can be especially useful if you have a new or expensive car, as the cost of repairs for such cars can be very high. With zero dep car insurance, you can be confident that you will not have to worry about such expenses and can focus on getting your car back in good condition.
6) Faster claim settlement: Zero dep car insurance can lead to faster claim settlement compared to a regular car insurance policy. This is because in a zero dep policy, the insurance company covers the full cost of repairs without taking into account the depreciation of the car or its parts.
This means that the insurance company is more likely to approve the claim quickly and without any disputes. Additionally, since there is no need for the insurance company to calculate the depreciation value, the entire process of claim settlement can be faster and smoother. This can be a significant advantage, especially in case of an emergency where you need your car back on the road as soon as possible.
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7) Maintains the value of a car: A car insurance may not necessarily directly increase the resale value of your car, but it can indirectly help to maintain the value of your car. With a zero dep policy, the insurance company covers the full cost of repairs without taking into account the depreciation of the car or its parts.
This means that the car can be repaired to its original condition without any out-of-pocket expenses. As a result, the car may retain its original value and look, which can be a factor in determining its resale value.
Furthermore, if you have a zero dep policy, you may be more likely to get your car repaired at an authorized service center, which can use genuine spare parts and ensure that the car is repaired to its original specifications. This can also help to maintain the car’s value and ensure that it remains in good condition over time.
Conclusion: Overall, zero dep insurance is an excellent option for car owners who want to ensure that they are fully covered in case of an accident and want to avoid high out-of-pocket expenses. It offers comprehensive coverage and peace of mind and can help protect the value of your car in the long run.
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