Is Zero Depreciation Car Insurance Worth the Extra Cost?

Pros of Zero Depreciation Cover in Car Insurance

Zero depreciation cover in car insurance is offered as an optional rider that comes at an extra premium. Opting for zero depreciation cover in car insurance offers the following benefits:

1. Having this cover minimises out-of-pocket expenses in case of damage or loss suffered in an accident. Especially, it is highly beneficial for new car owners.
2. You can get a higher amount of claims in case of total loss or damage to the vehicle in an accident. Also, whenever there is a repair or replacement of any parts, you get the full claim payout without any depreciation deduction.
3. It gives complete protection to your new and expensive car, as parts are these vehicles can be expensive.
4. Knowing your car is covered completely without any depreciation gives you a sense of security and peace of mind.

Cons of Zero Depreciation Cover in Car Insurance

Though a zero depreciation car insurance cover is a crucial rider, it also has a few downsides. Here are the cons of zero depreciation cover in car insurance:

1. Zero depreciation cover is generally available for the first five years of a new car purchase.
2. Having an additional rider like zero depreciation cover increases the total car insurance premium by 10 % to 20%
3. Zero depreciation cover may not be applicable for all types of claims. For example, engine damages are generally not covered under zero depreciation cover. It is important to look at the terms and conditions of the cover while availing the rider.
4. The zero depreciation cover may come with caps. For example, most of the insurance companies restrict to two claims a year.
5. Zero depreciation cover is not applicable for consumables like nuts, bolts, engine oil, etc. You may need to avail of an additional rider ( consumables cover) for that.

Jio Insurance Broking helps you understand various optional riders that are offered with the car insurance policy. It provides a platform for you to compare various car insurance plans based on features, add-ons, cost and customise the coverage as per your needs and affordability.

Is Zero Depreciation Cover Worth Opting for?

Whether it is worth opting for the zero depreciation cover in car insurance or not depends on the type of car, its age, driving habits, affordability and more.

The following are the scenarios in which zero depreciation cover is worth it:

1. You are insuring a new car ( 0 to 3 years), it is wise to have zero depreciation cover. Mainly, in the first five years, the depreciation factored in is higher ( up to 50%) under the standard car insurance policy. Hence, having this cover reduces the out-of-pocket expenses.
2. If you own a high-end, expensive vehicle which repairing or replacing the parts can cost you a fortune. Specifically, zero depreciation cover is must have for imported vehicles and luxury cars.
3. If you are a new driver or driving in congested metros, requires zero depreciation add-on is required to minimise the repair cost even in minor accidents. In case of total loss or damage suffered, this add-on can be highly beneficial.
4. Rider like zero depreciation adds a layer of financial security and offers peace of mind.

The following are the scenarios in which zero depreciation cover might not be worth it:

1. If you are insuring your old car (more than 5 years old), zero depreciation cover is not a cost-effective option.
2. If you are a driver with no claim history or if you rarely use your car, zero depreciation cover may not be a wise choice.
3. If you cannot afford a higher premium, it is wise to skip optional riders.

Conclusion

To sum up, zero depreciation cover is a valuable add-on for new car buyers to enhance the financial protection against the potential risk of damage. Especially if you own a high-end, luxury or imported car that is highly expensive, it is wise to invest in zero depreciation cover. The additional cover can save you a huge amount at the time of a claim.