It is a common matter of fact that most people in India are ignorant of terms and conditions pertaining to insurance because of which they either invest in the wrong kind of insurance or shy away from paying extra for additional riders that can help mitigate their expenses in the long run. Vehicle owners tend to confuse between terms like comprehensive car insurance, zero depreciation car insurance and many others that are used while buying a motor insurance policy.
Understanding Zero Depreciation Cover
“All good things must come to an end” is a common adage that explains how one needs to consider the effect of depreciation while calculating the current value. Zero Depreciation Cover also known as “Nil depreciation” or “Bumper to Bumper car insurance” leaves out scope of deducting depreciation from the amount of coverage calculated, thus, giving the insured complete coverage of the damage incurred. This means that no matter the nature and extent of damage the vehicle owner suffers, the insurance company is liable to pay in full the entire cost of replacement of the portion that had been damaged. However, this excludes coverage on car batteries and tyres or damage of engine owing to oil spillage or moisture.
How Does Zero Depreciation Cover Benefit The Insured?
The value of any car goes down each year owing to continual depreciation. After a claim for the insurance amount has been filed by the vehicle owner, the insurer calculates the amount payable to the insured keeping the depreciation factor in mind. But for those who had paid for zero depreciation cover, the insurer will pay the entire amount of replacement costs.
Having a Zero Depreciation Cover Benefits Most:
• People who have bought new cars
• People with fetish for luxury cars
• People who have very limited or zero experience of driving
• People living or parking their vehicles in accident-prone areas
• People finicky about dents or scratches on their cars
• People worried about damage caused to original spare parts fitted to their vehicles
How Does Zero Depreciation Cover Differ From Standard Comprehensive Cover?
Most people argue that they had chosen to pay for comprehensive car insurance and blame the insurers for cheating off their money using misleading terminologies. The most important difference between the two is the amount of depreciation calculated. Motor insurance policy holders who had opted for a standard comprehensive cover suffer the blow of depreciation as the amount of claim received is equivalent to the coverage amount minus depreciation. This means that the standard comprehensive cover does not offer the benefit of zero depreciation, thus, resulting in estimations of insurance claims based on current value of the vehicle.
A zero depreciation cover is more expensive to the extent of roughly 15-20 percent more than the standard car insurance policy, while its benefits far outnumber the advantages of the latter. Having a zero depreciation cover though involves payment of a substantially higher amount of premium, availing the benefits of receiving the entire replacement costs in case of massive collision or accident makes it worthwhile.
Caveat: For vehicle owners paying zero depreciation cover, most insurance companies limit the number of claims they can make in a year. Irrespective of having bought car insurance online or offline, this caveat aims to deter policyholders from claiming insurance amount for every single dent or damage suffered.
Summary: Whether one is buying car insurance online or offline, it is necessary to understand the various features that form a part of the insurance component offered by various insurance companies. People avoid payment for Zero Depreciation Cover in most cases as they lack knowledge of the meaning of this term and its implied benefits. In addition, the myth that having a comprehensive car insurance cover puts an end to the incidence of minor expenses needs to be tackled.