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5 Things to know about zero depreciation for your car


A zero depreciation policy is also known as Nil Depreciation Cover and Bumper-to-Bumper car insurance cover.

Zero depreciation is a car insurance cover that covers you for the depreciation cost that you may have to bear otherwise, following an accident that damaged your car. Depreciation cost is the decrease in the value of your car over a period of time due to continuous use and general wear & tear.

When you file a car insurance claim, you are paid the claim amount after subtracting the voluntary deductible chosen by you and the depreciation cost associated with your car. But, if you opt to buy a zero depreciation car insurance cover, then, you just have to pay the voluntary deductible from out of your pocket. And your insurer will pay the rest of the claim amount.

A zero depreciation cover offers complete coverage for the repair/replacement of these parts of your car: fibre, rubber, metal, glass and plastic parts.

Benefits of zero depreciation car insurance cover

  • A zero depreciation cover saves you from paying a hefty amount towards the repair/replacement of the parts of your car, following an accident, which you have to pay otherwise.
  • With a zero depreciation cover, you get maximum settlement of your claim amount. You just have to bear the cost of mandatory deduction.
  • A zero depreciation provides coverage to your car over and above the coverage provided by your existing car insurance policy.
  • A nil depreciation cover helps to increase your savings when you file a car insurance claim.

Factors to consider before buying zero depreciation car insurance cover

  • You should check the exclusions of the zero depreciation cover before you decide to buy it. Some of the generic exclusions are:
    • Engine damage due to water ingression or oil leakage
    • Mechanical breakdown
    • Damage caused because of common wear & tear
    • Damage of uninsured items
    • Complete/total loss of the vehicle
  • You should check the number of times you can make car insurance claim after purchasing the zero depreciation cover. Most of the companies do not allow you to make more than 2 claims in your policy year if you have opted for the zero depreciation cover along with your normal car insurance policy.
  • You should get a zero depreciation cover if:
    • Your car is new (less than 5 years of age)
    • Your car is a luxury car
    • You live in an accident prone area
    • You have very expensive spare parts fitted in your car
  • You should check the final premium amount before you buy/renew your car insurance policy along with the zero depreciation cover.

Difference between comprehensive car insurance policy and a car insurance policy with zero dep cover


Points of Difference

Comprehensive Car Insurance

Policy with Zero Dep


A comprehensive car insurance policy offers the following coverages:

  • Loss or damage to your car due to natural calamities
  • Loss or damage to your car against unplanned activities
  • Personal Accident Cover
  • Third Party Legal Liability
A comprehensive car insurance policy with a zero depreciation cover offers all the coverages along with the coverage for the repair/replacement of your damaged car (insured) parts due to collision without considering their depreciation cost.


The premium for a comprehensive car insurance is slightly less as compared to a policy with zero dep cover. As this is an add-on cover that has to be purchased over and above the comprehensive car insurance cover, the premium to be paid is slightly higher than a normal policy.

Number of Claims

You can make multiple claims under your comprehensive car insurance policy up to the IDV of your car. You can make a maximum of 2 claims in your policy year if you buy a zero dep cover.

Out of pocket expenses

You might have to bear a large sum on your own owing to the mandatory deductions as well as depreciation cost of your car parts. The out of pocket expenses are significantly reduced as the depreciation cost is paid by your insurer.

Age of the car

A comprehensive car insurance cover can be purchased for a new as well as old car. A zero depreciation cover can only be purchased for newer cars up to 5 years of age.

How does zero depreciation cover affect the premium of your car insurance policy?

The premium of your car depends on the following factors:

  • IDV (Insured’s Declared Value) of the car
  • NCB (No Claim Bonus), if applicable
  • Liability premium of your car, which can vary every year
  • Cubic capacity (cc) of the vehicle
  • Geographical zone
  • Add-on covers (Optional)
  • Accessories that you have used in your car (Optional)

A zero depreciation cover is an add-on cover that you must get with your comprehensive car insurance cover. So, opting for this add-on cover will increase the cost of your car insurance premium a little, But, this little incremented value saves a lot of your money when you file for a car insurance claim.

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Published on:26 Mar, 2019

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