Zero Dep Car Insurance: Does the claim really cost you a single rupee from your pocket? Know the rules and benefits

Taking a Zero Dep policy while renewing car insurance is proving to be a smart decision for many car owners these days. This add-on cover is especially beneficial for owners of new or less than 5 years old vehicles. But many people misunderstand this and think that it will not cost them a single rupee from their pocket in case of an accident.

However, the truth is something else. If you have a new car and you are planning to buy zero dep insurance for it, then this article of ours is useful for you. Let us understand in detail what is zero debt, what are its benefits and what is the real rule of not having to pay out of pocket in accident claims?

What is zero depreciation cover?

Zero Depreciation/Bumper to Bumper Cover is an optional add-on cover in a comprehensive car insurance policy. In a normal insurance policy, when there is an accident or damage, the insurance company deducts the depreciation value of the vehicle parts (like plastic bumpers, fiber body parts, rubber parts, headlights, glass, etc.) while settling the claim.

Depreciation means that the older the vehicle gets, the less the value of its parts decreases. For example-

1. 0-5% depreciation on plastic parts in a new vehicle.
2. Up to 30-50% in a 2-3 year old vehicle.
3. 50% or more in more than 5 years.

Due to this, the claim amount gets reduced and the owner has to pay extra money from his pocket. Zero Dep cover eliminates this depreciation deduction. That means the insurance company pays the full market value of the parts (without any deduction). Let us know the benefits of zero dip insurance.

1. More amount is received in claim

If a bumper, door, headlight or windshield has to be replaced in an accident, there can be a 30-50% reduction in the normal policy. The entire amount is available in zero deposit, which can save thousands to lakhs of rupees. This gives a huge advantage especially in luxury or expensive cars.

2. Reduces out-of-pocket expenses

Due to no depreciation deduction, out-of-pocket expenses are significantly reduced. In many cases, only the compulsory deductible (which ranges from Rs 1000-2000) has to be paid.

3. Perfect for new vehicles

Most insurance companies provide this cover only on vehicles up to 5 years old. However, in some it is even up to 7-10 years. Parts in a new car are expensive, hence this cover proves to be many times more beneficial than the premium.

4. Complete protection of plastic, rubber, fiber parts

These parts depreciate the most and zero dip covers them completely.

5. Mental peace

There is more traffic in cities, minor scratches or accidents are common. Zero deposit makes the claim process easier and less expensive.

The rule of not pocketing even a single rupee: What is the truth?

Many people are under the misconception that by taking Zero Dep, everything becomes 100% free and not a single rupee will be spent from the pocket. But this is not completely true. Zero down payment only removes the depreciation deductions, but you may still have to pay some expenses. Come, let’s take a look at these.

• Compulsory Deductible: This is fixed in every policy, which can range from Rs 1000-5000 depending on the value of the car. This amount is not given by the insurance company, you have to pay it.
• Voluntary Deductible: If you have chosen additional deductible in the policy, that too is out of your pocket.
• Consumable Items: Items like oil, brake fluid, gaskets, nuts and bolts are generally not covered unless a separate consumable cover is purchased.
• Tyre, Battery, Engine Parts: These are not covered separately. For this you will have to get a separate add-on engine protection cover.
• Non-accidental damage: Wear and tear or normal wear (scratches) are not covered.
• Third Party Claim: If someone else is harmed due to your mistake, third party liability is covered separately. In such a situation, zero dip will not work.

Example: Suppose a bill of Rs 50,000 was incurred in an accident. In a normal policy, there can be a depreciation deduction of Rs 20,000, then the company will give Rs 30,000 and you will have to pay a deductible of more than Rs 20,000. In zero down payment, the company will pay the entire Rs 50,000 (minus the deductible), that is, your expenses will be limited to the deductible only.

Therefore, to be fair, zero debt can lead to very little out of pocket expenditure, but it is not completely zero. If you also take other add-ons like consumable cover, roadside assistance etc., the expenses may be further reduced, but the insurance premium will increase significantly.

Our advice: While renewing car insurance, definitely choose zero depreciation cover. Especially if your car is new, used a lot in the city or is expensive, then this becomes more important. Its premium seems a little high (about 20-30% extra), but once the claim comes, it saves manifold. Always read the policy document carefully and clearly ask the insurance company what is covered and what is not.