What is zero dep insurance and how does it differ from comprehensive car insurance?

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To ensure you get car insurance claims on time and hassle-free, you purchase a comprehensive policy. A comprehensive car insurance policy covers the risk related to own damage (OD) and also covers the risk to third parties. But, one still may not get the full claim when the need arises. This is due to the depreciation value being deducted resulting in a lower claim amount. Getting a car insurance claim for less than expected is not something we will like.

When we insure a car or any other vehicle, the amount insured is called the Insured Declared Value (IDV) which is calculated based on the manufacturer’s price of the car and depreciation based on the age of the vehicle.

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Based on the IDV of the car, you pay the premium to the insurer. And, at the time of claim, IDV is adjusted for depreciation – From 5%, if the car is less than 6 months old, to 50% depreciation on the car over 5 years old.

In addition, for replaceable auto parts, the depreciation value is fixed regardless of the age of the car.

Thus, at the time of a claim, an automobile policyholder ends up receiving a lower amount from the insurer due to certain deductions in the form of depreciation.

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There is a way to get the full IDV at the time of claim. If zero amortization top-up coverage is added to the base policy, the claim is paid in full with no deductions. The zero amortization top-up cover is an optional feature and you have to pay an additional premium to enjoy its benefits.

If you hold car coverage with Zero-Dep benefit, then at the time of a claim, the full IDV can be claimed without deduction for depreciation and damaged parts.

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Although the claim is up to the IDV amount, any costs related to normal wear and tear and mechanical failures shall be borne by the insured. If you’re looking to buy a new car, adding this extra benefit is helpful. Most insurance companies allow zero-deposit coverage to be added to the initial purchase of a car only.

Therefore, there is a difference between comprehensive insurance and zero refund insurance. The former is essential while the former makes it full coverage with no outlays.

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