What is Zero/Nil Depreciation in Car Insurance?

Zero depreciation car insurance means an insurance add-on cover where the depreciation value of any damaged or replaced car parts is not deducted from your insurance claim. Depreciation is the reduction in the value of the car’s part with age. With the zero dep insurance add-on, you can claim the complete amount. Zero depreciation car insurance is also called bumper to bumper cover.


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What is Zero Depreciation in Car Insurance?

Zero Depreciation Car Insurance Meaning - Have you ever found yourself wondering what it is? This cover, also called zero dep car insurance, is used with a fair amount of frequency. This term refers to an add-on cover (or rider) that you can choose from when you purchase a comprehensive car insurance policy. This cover makes sure that your insurer will not factor in any depreciation when calculating what your coverage ought to amount to. This helps ensure that you are provided with more thorough protection. Depreciation here refers to the decrease in the value of a vehicle. This means that newer vehicles are worth more than those that are older. Depreciation may also apply to the components used in a car.

The coverage of a zero depreciation car insurance add-on kicks in when your vehicle is damaged beyond repair in an accident. Your insurer is liable to provide you with comprehensive compensation that doesn’t take into account the depreciation rate from your claim. Zero depreciation insurance for cars allows policyholders coverage on all parts of their vehicles barring tyres and batteries.

Benefits of Zero Depreciation Car Insurance

Provided you purchase a comprehensive car insurance plan and invest in zero depreciation car insurance coverage, you can enjoy the following benefits.

Savings Galore

Zero depreciation car insurance helps bring down out of pocket expenses as depreciation costs aren’t considered at the time claim settlements are made.

Get Higher Claim Settlements

With a zero dep insurance plan, car owners benefit from having their insured claims being settled without the depreciation value being deducted.

Peace of Mind

0 depreciation car insurance coverage allows you to enhance the basic coverage your plan provides and makes for prudent investment. With such an add on, you can rest easy knowing that the insurer has your back in the event that you have an accident involving your car.

Greater Resale Value

NIL dep insurance for a car means that it acquires a greater resale value so long as this rider is active.

Impact of Zero Depreciation on Car Insurance Premium

Listed below are the factors that are most likely to impact a comprehensive car insurance premium that includes a zero-depreciation rider.

Age of the Vehicle Under Consideration

The newer a vehicle is, the more valuable it is whereas the older a vehicle is, the less valuable it may be. This is owed to the fact that components used in a vehicle have different rates of depreciation.

Make and Model of the Vehicle

The make and model of the vehicle under consideration impact the overall cost of the premium tethered to a comprehensive car insurance policy.

Residential Area

The location in which you purchase and drive your vehicle can impact what your premium (that includes zero depreciation cover) amounts to. Areas that are more susceptible to natural disasters, for instance, may have higher premiums tethered to them.

Price of the Vehicle

A more expensive car may continue to hold its value for a longer period of time in comparison to a more modest vehicle making this add-on most pertinent for luxury car owners.


Each of the aforementioned considerations impacts what zero depreciation will amount to on a car’s insurance premium.

How Much Will a Zero Depreciation Add-on Cover Cost?

Have you ever found yourself wondering what the zero depreciation car insurance add-on amounts to as far as vehicular insurance is concerned? If so, you have come to the right place! As this is a rider that can be added to a comprehensive car insurance plan, it ordinarily ranges approximately 10 to 15 per cent above the primary premium amount. This cover is worth purchasing and is frequently endorsed by insurance experts. This is because by paying a modest sum of money, you are entitled to holistic financial protection for your vehicle.

Role of Zero Depreciation Cover During Claim Settlements

As made clear above, depreciation refers to the loss in value of an asset owing to a multitude of factors ranging from age, to wear and tear and general obsolescence. Since cars lose value over time, they are classified as depreciating assets. In order to understand this better consider the fact that new cars have a higher price point in comparison to older cars. This is owed to the cost of depreciation being deducted from the entire value of the vehicle.


A standard car insurance plan only takes into account and provides coverage for the insured declared value (or IDV) of a vehicle. This value is arrived at once depreciation is subtracted from the total value of the vehicle under consideration. This value continues to decrease over time which means that the total amount you can claim on your policy from your insurer continues to reduce. What this means is that with a basic comprehensive car insurance policy, coverage extends only so far as the depreciated cost of the car is concerned. You (as a policyholder) will be required to bear the difference.


By opting for the zero depreciation car insurance add-on cover, however, you can maximise the reimbursement given to you at the time of your claim being settled. This is because the depreciation in value of your insured vehicle is not considered.


Further, if your car is damaged owing to an accident that occurs a few years following the purchase of this cover, you will still be provided with a claim. This claim will amount to close to the original price of your car. Thus, the zero depreciation car insurance add-on cover allows you to maximise your claim reimbursement.

When is Zero Depreciation Claim Null and Void?

The zero depreciation car insurance add-on cover is excluded under the following considerations.


  • If you happen to drive the insured vehicle without a valid licence and damage the car in any capacity, coverage will not be provided for the same

  • Vehicles that are over five years old aren’t eligible to avail of this rider as much of the original value has declined by this point in time

  • If you have an accident while driving your insured vehicle under the influence of intoxicants, zero depreciation cover will not be included

  • Compulsory deductibles that may be included with a base car insurance plan are not covered by zero depreciation car insurance coverage

  • Additional costs associated with the purchase of coolants, brake oil and engine oil are not covered under zero depreciation cover


If you have bought a new car that is under five years old, buying zero depreciation car insurance makes sense. This is because this rider helps protect the vehicle from losing value as far as insurance claims are concerned. This means that with such a rider active, you can maximise the claim you derive from your comprehensive car insurance plan. If you are wondering where to purchase viable zero depreciation car insurance, consider visiting the Bajaj MARKETS website. Here, you will find a number of plans that are worth purchasing.

Check Out Car Insurance Plans Available at Bajaj MARKETS


  • ✔️What is not covered by zero depreciation car insurance?

    A zero depreciation car insurance policy does not cover any consumables, oil change, engine damage that may be caused due to oil leakage or water ingression, or any mechanical breakdowns. It provides complete coverage for all rubber, fibre, and metal car parts.

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