The very instant you drive a car outside the showroom, its value gets reduced. And as you use it, it keeps further reducing with time. This reduction in value is what we call depreciation. And while it may not be directly correlated with the car but to its parts instead, it is wise to obtain a zero-depreciation car insurance policy.
Zero-dep car insurance policy defined
Also called Nil Depreciation, a Zero-depreciation car insurance policy is a type of add-on that provides absolute protection against depreciation. With this policy complementing a basic motor insurance plan, owners never have to worry about depreciation. The insurer will not deduct any depreciation amount to any claim to be paid out.
When added to a basic car insurance policy plan, you enjoy the following:
- Depreciation value is never deducted during claim payout
- Out of pocket expense gets significantly reduced
- Enhances insurance coverage
- Efficiently secures a prized possession
Factor to study before purchasing one
- Policy cost. Because this add-on protects you against compete depreciation, expect and be prepared to pay more.
- Vehicle’s age. Zero-dep coverage is a great financial tool. But it best suits vehicles that are no more than 5 years old. In case you have an older model, consult with your insurance agent for the best option.
Not every repair for your vehicle is covered by the Zero Depreciation policy. There are particular items that are also excluded. Accessories that aren’t included in the basic product are not included. Insurers also exclude batteries and tires from the coverage.
Additionally, mechanical breakdowns and normal wear & tear are part of the exclusions. Every insurance provider has different terms. Make sure to study them diligently before signing up for one.
Aspects that affect Zero-dep premiums
- Car’s age –The older the vehicle, the higher the premium will be
- Make and model – There are models that are excluded from the coverage provided by Nil Depreciation
- Location – Expect to pay higher if your area of residence or work is accident-prone.