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About Zero Depreciation Car Insurance

Zero depreciation is an add-on cover available with a comprehensive car insurance policy. With this add-on, your insurer does not factor in depreciation from the coverage, providing you complete protection. In other words, if your car is damaged beyond repair in an accident, the insurer will compensate you for the full amount without factoring in the depreciation rate from the claim. With zero depreciation car insurance, you get coverage on all parts (excluding the tyres and batteries) of your vehicle.

What is Depreciation?

Depreciation is the decrease in the value of an asset over time. For instance, a newer car model will be more expensive than its older versions. Likewise, depreciation is associated with most of the car components, such as glass, plastic, the metal body, etc., and each of these materials has a different rate of depreciation.

Here’s how depreciation in cars is calculated.

  • Rubber, Nylon, Plastic Components, and Batteries: Depreciation rate is 50%

  • Fibreglass Components: Depreciation rate is 30%

  • Wooden Components: Depreciation rate is 5% in the first year; 10% in the second year, and so on

Depreciation Rate of Vehicles

Age of Vehicle

% of Depreciation

6 months or below


Between 6 months and 1 year


Between 1 year and 2 years


Between 2 years and 3 years


Between 3 years and 4 years


Between 4 years and 5 years


Depreciation Rate of Metallic Components in Vehicles

Age of Vehicle

% of Depreciation

Below 6 months


Between 6 months and 1 year


Between 1 year and 2 years


Between 2 years and 3 years


Between 3 years and 4 years


Between 4 years and 5 years


Between 5 years and 10 years


Above 10 years


Benefits of Zero Depreciation Car Insurance

When you buy a comprehensive car insurance plan with zero depreciation cover, you get the following benefits:

  • Saves a Fortune: It helps reduce out-of-pocket expenses since depreciation cost is not considered while filing a claim settlement.

  • Avail a Higher Claim Settlement: Most claims regarding insured parts are settled without deducting the depreciation amount.

  • Peace of Mind: A Zero Depreciation car cover adds more value to the basic coverage and makes your investment worthwhile. Be rest assured knowing that your insurer has your back during unfortunate events that involve your car.

If you want to save yourself from depreciation costs in the future, you can opt for the Depreciation Shield top-up cover on Finserv MARKETS and get the maximum benefits out of your car insurance policy.

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

Are you wondering how much the Zero Depreciation car insurance costs? Since it is an add-on cover on your comprehensive car insurance policy, it usually costs 10-15% over and above the basic premium amount. So, is the zero depreciation cover worth it? Yes, insurance gurus swear by it. To put it in perspective, you are just paying a nominal amount to get complete protection for your car.

Factors Affecting Zero Depreciation Car Insurance Premium

The following factors are most likely to affect your comprehensive car insurance premium with zero depreciation cover.

  • Age of the vehicle

  • Make and model

  • Your residential area

These factors also affect your basic car insurance premiums. In case you are wondering how much your desired comprehensive car insurance will cost, use the car insurance premium calculator available on Finserv MARKETS to determine the same.

Why is Zero Depreciation Car Insurance Better Than a Basic Car Insurance Policy?


Zero Depreciation Car Insurance

Regular Comprehensive Car Insurance

Claim Settlement

You receive maximum compensation on the claim

The claim amount is based on the current value of the car, including depreciation

Premium Rate


Comparatively low

Repairing Expense and Plastic Fibre

Your insurer will bear all the expenses

You will have to pay it from your pocket

Age of the Car

Generally, covers cars up to five years of age

It can be taken for vehicles that are more than five years old

If you are looking to buy Zero Depreciation car insurance for your vehicle that is older than five years, get in touch with the insurer before buying the policy.

Role of the Zero Depreciation Cover During Claim Settlements

As we know, depreciation is the loss of value of an asset due to factors such as age, wear and tear, and obsolescence. As cars are depreciating assets, they tend to lose their value over time. For example, a new car will cost more than an older one only because the cost of depreciation is deducted from the total value of the vehicle.

A standard car insurance policy only provides coverage for the insured declared value (IDV) of your motor vehicle. The IDV is derived after subtracting depreciation from the total value of your car. It eventually decreases with time, thereby, reducing the total amount you can claim on your policy from the insurer. Thus, a basic comprehensive car insurance policy only covers the depreciated cost of the car while the policyholder needs to bear the difference.

When you opt for Zero Depreciation car insurance, you can get maximum reimbursement during the time of claim settlement as, in this case, the depreciation is not taken into consideration.

If your car is damaged in an accident even after a few years post purchasing the zero depreciation cover, you will receive a claim amount close to the original cost of your car. Hence, by buying this add-on cover with your comprehensive car insurance plan, you get maximum reimbursement at the time of claim.

Things to Consider Before Buying Zero Depreciation Car Insurance

It is important that you consider the following factors before opting for Zero Depreciation car insurance:

  • Cost: Buying comprehensive car insurance with a Zero Depreciation cover entails higher premiums. It is because this plan offers full protection without factoring in depreciation so the premiums charged are relatively high.

  • Number of Claims: Most insurers limit the number of claims you can make in a single year. Hence, you must check with the insurer before purchasing zero depreciation car insurance.

  • Available for New Cars: Zero depreciation cover is generally available only for new cars and for vehicles that are less than five years old. Practically speaking, it is not a very cost-effective option to choose this add-on cover if your car is older than five years.

Who Should buy Zero Depreciation Car Insurance?

As stated earlier, comprehensive car insurance with zero depreciation cover is ideal for: new car owners. However, it is also best for:

  • Luxury car owners

  • New /Inexperienced drivers

  • People living in accident-prone areas

  • Cars with expensive spare parts


Having zero depreciation car insurance is a wise option. If you are looking to buy such coverage, browse the different car insurance plans available on Finserv MARKETS. With us, you can benefit from features such as a wide range of add-on covers, cashless claim settlements, hassle-free renewals, 24x7 assistance, and so much more.

Check Out Car Insurance Plans Available at Finserv MARKETS

FAQs on Zero Depreciation Car Insurance

  • ✔️Is zero depreciation cover available for five-year-old cars and later?

    No. Zero depreciation coverage is only available for cars that are less than five years old.

  • ✔️Can I only buy zero depreciation coverage without a comprehensive car insurance plan?

    No. Zero depreciation add-on coverage can be bought only with your existing comprehensive car insurance plan.

  • ✔️What other add-on covers can I choose for my car?

    Other add-ons that you should consider buying for your car are:

    • No Claim Bonus (NCB) Protection (usually free)

    • Loss of Personal Belongings

    • 24x7 Roadside Assistance

    • Return to Invoice

    • Key Replacement

  • ✔️Is it necessary to buy add-on covers over your basic car insurance?

    Add-on covers provide extensive coverage to your vehicle that your comprehensive car insurance plan might not be covering. Hence, it is highly advisable to buy only those add-ons that you think might come in handy.

  • ✔️Can I buy zero depreciation cover on my third-party car insurance policy?

    No. Zero depreciation and other add-on covers are exclusively available with a comprehensive car insurance policy only. You cannot enhance the scope of your third-party car insurance with any add-on benefits.

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