How a Zero-Dep Car Insurance Policy Benefits You during Claims?
4.2/5 (31 page reviews)
The significance of a car gets reduced the moment you take it out of the showroom. Furthermore, this significance will stay reducing overtime. This gradual reduction in the market significance of a car is termed Depreciation. Depreciation, basically, is a decrease in the significance of an object with time. Which is why, after buying a car, its significance starts reducing.
The depreciation significance is not directly associated with the car; it is associated with different non-durable materials like metal, plastic, glass, fiber, and others. Again, for every material, there is a different depreciation rate. Thus, estimating the rate of deterioration of these materials reflects the overall depreciation of a car.
Depreciation significance of a car is taken into consideration when you file an insurance claim. The insurer analyses the damage sustained by the car and accordingly determines a depreciation significance. Even after best car insurance policy from a reputed insurance service provider, you will still have to face the depreciation factor during the claim.
What is Zero Depreciation Cover?
To steer clear of the difficulty of Depreciation, almost every car owner wisely prefers to avail a Zero Depreciation car insurance policy. A Zero Depreciation cover is simply an add-on cover which complements the basic car insurance policy. With this add-on cover, you don�t have to face any depreciation in your insurance coverage.
With Zero Depreciation car insurance policy, complete coverage against depreciation is offered to your car. Consequentially, the insurer won�t subtract the depreciation significance while covering any claim amount. Zero Depreciation cover is also termed as Nil Depreciation.
Difference between an Insurance Cover Loaded with Zero Depreciation and a Normal Insurance Cover
Let�s take an example to appreciate the variation:
Normal Insurance Cover:
Suppose, the overall cost of damage associated with your car is Rs. 10,000 and you have filed an insurance claim against this amount. While processing the claim, the insurer will first determine the depreciation rate associated with the damaged parts and thereafter will calculate the payable claim sum. Let�s say that the insurer calculated the depreciation rate as 20%. Therefore, the amount offered to you as claim settlement will be Rs. 8000.
Zero Depreciation Cover:
With a Zero Depreciation car insurance policy, the depreciation significance is not taken into consideration, hence, the insurer will offer the entire amount of Rs. 10,000.
Now, it's worthwhile to determine whether or not you need a Zero depreciation rider with your car insurance policy. Using the table below, you can verify for yourself if a Zero Depreciation cover is any better than the standard comprehensive insurance policy. Also, do have in mind your insurance needs.
Benefits of having a Zero Depreciation CoverAs depreciation factor is not taken into consideration during claim settlement, the out-of-pocket expenses are vastly reduced.Enhances vehicle insurance coverage and efficiently secures your prized possession.Factors to Consider before Buying a Zero Depreciation Cover
There are certain things which it's worthwhile to have faith in while buying a Zero-Dep add-on cover.
Cost of Policy �As a Zero Depreciation cover offers complete coverage with out considering any depreciation, it costs slightly more than a comprehensive insurance policy.Best-Suited for �The Zero Depreciation cover is only applicable to new cars of up to five years historic. If your car is more than five years historic, you ought to consult your insurer for a suitable course of action. For cars older than 5 years, Zero-Dep is offered but only from offline sources.Calculation of the Rate of Depreciation:
Now, on what basis does the insurer determine the depreciation rate? Insurance Regulatory and Development Authority of India has designed a specific rate-chart for determining the depreciation significance.
For plastic, Nylon, and Rubber Parts � 50% depreciation is to be deducted.For Fiberglass Components � 30% depreciation is deducted.For wooden and Metallic Parts � Depreciation is subtracted as per the age of the car. For a 1st year � 5%, for second year � 10% and so on.
Therefore, depending on the age of your car, the insurer calculates the depreciation significance.
What is not Covered by Zero Depreciation Insurance?
Not all the repairing expenses are covered under Zero Depreciation coverage. There are certain things which are excluded. Mainly, the add-ons that are not part of the standard product are the not integrated in the coverage. The insurers do not embody batteries or tyres either.
Again, the mechanical breakdowns due to wear and tear are also not covered. Every insurance friends has different phrases and prerequisites. So, you must go through the policy fine print carefully to appreciate the exclusions of the coverage.
Is Zero Depreciation Cover worth it?
It�s true that Zero depreciation cover has its advantages. Though the cost associated with Zero depreciation policy is around 20% more than that of a standard comprehensive policy, it's going to still turns out to be a incredible investment.
Instead of paying a large amount out of your pocket, it�s better to pay a little more occasionally and forgetting about out-of-the-pocket repair costs. Zero Depreciation add-on cover will get you the full significance of your vehicle when it is severely damaged or stolen. It�s a wise decision to invest in a Zero Depreciation add-on cover.
Premium for Zero Depreciation Policy
As you might know by now, you have to to pay a greater premium for a Zero Depreciation cover. This premium chiefly depends on the Insured Declared Value (IDV) of the car. In fact, it is the major factor.
IDV is the maximum amount that you just can claim against total damage, loss or theft of your car. Thus, the more is the IDV, the more will be the premium in the direction of a Zero Depreciation Add-on. In general, the premium for Zero Depreciation add-on is 10 -20% more than a standard comprehensive policy.
Factors Affecting the Zero-Dep Premiums
Apart from the IDV, there are some other internal factors that vastly affect the premium of this particular add-on cover.
Age of Car - Older the car, the more is the premium. Most insurers don�t offer Zero Depreciation cover for cars older than five years; some have even restricted it up to three years.Model of the Car -There are some car models which are not covered by a Nil Depreciation policy. Consult with your insurer/agent before buying this add-on cover.Location - If you live in an accident-prone area, the premium in the direction of a Zero Depreciation policy will be greater.Who needs to Buy Zero Depreciation Add-On?
Zero Depreciation cover is highly recommended for new cars. But, there are some other cases where a Zero-Dep rider is indispensible:
People who have luxurious cars can purchase a Zero Depreciation plan to steer clear of the high expenses associated with maintenance as the cost of spare parts and the rate of depreciation of such cars is greater.New drivers who are not well-familiar with driving should go for Zero-Dep as their chances of meeting with an accident is greater. To minimize the financial stress after accidents, zero depreciation cover is a must for new drivers.People who are living in accident-prone areas should also go for this add-on cover. With this add-on cover, they're able to easily cover their damages with out any worries.If you worry about dents and bumps on your car and need to stay it in pristine condition, then you can purchase a zero depreciation add-on.
HALAMAN SELANJUTNYA:
