We have often come across the word depreciation. We usually hear it while we are reselling our machinery, especially cars, or while balancing our account books. Before understanding what is zero depreciation car insurance, it is important that you are familiarized with the concept of depreciation.
Depreciation plays a very crucial role in the motor insurance segment. Simply put it is a loss in the asset’s value. This deduction in value is done from time to time. It usually happens due to the factors like the age of the vehicle, no. of miles run, maintenance record, etc. This is the main reason why people prefer to buy second-hand cars because they get them at a reduced price.
We all know how complicated the insurance industry is. What usually happens is in case of an accident or damaging event, if the parts of your car are damaged, you won’t recover the whole amount lost.
Usually, the companies reduce the amount of depreciation on the part and then they pay you the balance. The person has to pay for the variation between the market value and depreciated part of the car.
This is where zero depreciation car insurance comes into play.
As the name suggests this category of insurance nullifies the depreciation factor while calculating the claim. If you buy a car insurance policy with zero depreciation then it doesn’t take into consideration the depreciation factor while reimbursing your claim.
The normal general insurance policies take into consideration the depreciation factor and then give you the amount as reimbursement. In zero depreciation, it’s not the case.
A zero depreciation policy can help you get the whole amount of compensation thus safeguarding you from all the losses that you may incur due to depreciation. You can buy this category of insurance while purchasing a new car or while renewing your policy.
As already mentioned, when you make a claim for any part of your car, the depreciation factor will not be considered while giving you the claim. The insurance company has to make the compensation which is in line with the market value of the car.
All the major insurers in the country provide this option in their offerings in the category of auto insurance. Zero depreciation is an indicator of the quality of the service provider.
Zero depreciation is a valuable addition to your basic auto insurance coverage. The elimination of depreciation factors makes your investment almost nil. It means that you will get a majority of all the amount that you have invested to repair your car or its parts.
It is a highly suitable option for the new drivers because the fear of losing money is eliminated. We all know that the car starts to depreciate as soon as it comes out of the showroom. The new drivers are more prone to accidental situations thus it is better to nullify the depreciation aspect with zero depreciation.
After understanding what is zero depreciation car insurance. Now you should understand the factors that you should look for before purchasing zero depreciation insurance coverage.
There is a certain limit in terms of the number of years for purchasing zero depreciation insurance for your cars. You should always know that zero depreciation insurance is only available for new cars. The best thing to do is buy this while purchasing your new car.
There are only a certain number of claims that you can make in the zero-depreciation policy. You should talk to the agent about this before making the purchase. This factor varies from one company to the other.
Always look at the mechanism that your insurer is opting for while settling your claim. There is a certain percentage of reimbursement limitation on each material. For example- 50% depreciation on nylon parts. This is a bit of a complex factor about which you can talk to the representative to easily understand this.
If you have registered your car in urban areas then your premium rate is going to be a bit high as compared to the rural areas. The reason is that the cars are most susceptible to damage in the urban areas as compared to the rural areas.
The fuel and engine type also plays a crucial role in deciding the zero-depreciation factor. The policies of each company vary as per the engine and fuel types.
People should also consider some personal factors before buying this option for their cars.
This was just a brief to explain what is zero depreciation insurance. You must always consult an expert and collect all the necessary information. The companies have a lot of options to offer to their customers, but you must always compare and only then choose a plan for yourself.
People apart from the above-mentioned categories should also opt for a zero-depreciation policy. This has become a very important aspect because the number of cars is increasing every day and the possibility of accidents and thefts is also on the rise.
It is always in your favor to choose the option of zero depreciation coverage. Depreciation is a factor that always leads to losses. The Zero depreciation insurance coverage will save you from the losses that may arise due to depreciation.
Are you looking for a new insurance policy or a policy renewal? Reach out to us and let us assist you.