As per the Motor Vehicles Act 1988, a valid insurance is mandatory for all types of vehicles running on Indian roads. While there can be no substitute for responsible and safe driving, a car insurance policy can cover your car and the driver against various unforeseen risks.
It is also important to know how a car insurance works when your car meets with an accident. Note that your insurance covers only a part of the expenses incurred to replace the expensive parts of the damaged car. Your insurer only pays for the replaced parts after deducting the depreciation amount and you need to pay the difference from your own pocket.
However, you can opt for a zero-depreciation cover to avoid paying high costs of depreciation on your car at the time of claim settlement. A ‘zero dep’ car insurance policy protects your car against the physical damages without factoring the element of depreciation. Read more to know about the zero-depreciation car insurance policy and how it works.
What is zero-depreciation car insurance?
Since your car is a depreciating asset, it will suffer a loss in value over time due to wear and tear of its parts. There is a certain depreciation rate associated with the parts that make up your car like plastic, rubber, glass, metals, etc. A new car starts depreciating the moment you drive it out of the showroom.
A zero-depreciation car insurance ensures complete coverage of your car, irrespective of its depreciation. It means that the insurance company will pay 100% amount on the claim for repairs and replacement of parts when your car gets damaged. Thus, you are assured of complete peace of mind with this cover.
Additional premium for a zero-depreciation cover
The premium paid for the car insurance depends upon the Insured Declared Value (IDV) of your car. It is the maximum amount you can claim with the insurer in case of total damage to your car or when it gets stolen within the policy period.
So, for 100% coverage of your car, you need to pay around 15-20% over the standard premium of a normal car insurance policy. However, this increment on insurance premium can save you a lot on the huge depreciation cost associated with your vehicle.
Who should buy a zero-depreciation policy?
Ideally, every new car owner should get his/her vehicle insured with a zero-depreciation policy to save on its depreciation with each passing day. Specifically, if you own a luxury car, you must have a ‘zero dep’ car insurance since the replacement or repairs of its parts can be very costly.
Also, if you’ve learnt driving recently or drive in an accident-prone area, a zero-depreciation policy is recommended since your vehicle is prone to the risk of meeting with an accident. You can look for best car insurance for your vehicle and buy car insurance online to save a little amount on the premium.
So, insure your car with a zero-depreciation cover and set out on a hassle-free ride.
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Published by Harris Scott