Zero Depreciation Car Insurance
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What is Zero Depreciation Car Insurance?
Zero depreciation car insurance means you get complete coverage for your vehicle without any depreciation charge for the first two years after purchase. Several add-ons with car insurance enable policyholders to get enhanced coverage by paying an additional premium. Insurance companies generally deduct a depreciation charge for your vehicle whenever they settle a claim. Your vehicle starts losing its value immediately after it leaves the showroom—this value further declines when you renew the policy after a year.
What is Depreciation in Car Insurance?
Depreciation refers to the reduction in the value of the vehicle over time due to age, wear & tear, and technological changes in the marketplace. As the market value of the car reduces due to these factors, there is a corresponding reduction in the amount you can claim from the insurance company in the event of any loss or damage. After assessing the loss, the insurer deducts depreciation from the claim amount and pays the balance to the policyholder. The higher the car’s age, the greater the depreciation charge.
Depreciation Rate for Car Parts
Parts made of glass: No deduction
Fiberglass components: 30% deduction
Parts made of plastic, rubber, or nylon: 50% deduction
The rates of depreciation for other parts are given in the table below:
Age of the Vehicle
Depreciation (%)
Less than 6 months
5
6 months to 1 year
15
1 year to 2 years
20
1 year to 2 years
30
3 years to 4 years
40
4 years to 5 years
50
Note: In the absence of a zero depreciation add-on cover, the above-mentioned rates of depreciation shall be charged by the insurer during claims settlement.
Relationship BetweenDepreciation and IDV
For e.g. the IDV of a 40-month-old car will be less than that of a 4-month-old car because a higher depreciation is charged for the former. As per the table above:
The depreciation rate is about 40% for a 40-month-old car. So the IDV is 60% of the ex-showroom price
The depreciation rate is just 5% for a 4-month-old car. So the IDV is 95% of the ex-showroom price
Difference Between Zero Depreciation Cover and Comprehensive Car Insurance
Zero Depreciation Cover
Comprehensive Car Insurance
Claim Amount
Compensation is paid fully without deducting depreciation
Claim Amount
Compensation is paid after deducting the applicable charges for depreciation
Premium
The premium is higher when you buy an add-on cover
Premium
The premium is lower without an add-on cover
Out-of-Pocket-Expenses
Lower due to enhanced protection
Out-of-Pocket-Expenses
Higher due to standard protection
Age of the Vehicle
Up to 5 years
Age of the Vehicle
Up to 15 years
Importance and Benefits of Zero Depreciation Car Insurance
Huge savings in financial expenses and protection against losses as the insurer does not deduct depreciation charges on claims
Easy and convenient for vehicle owners to repair their cars and restore them to normal condition after an accident
The cost of additional premiums is nominal and provides optimal value for policyholders.
Zero depreciation cover is most appropriate for new or high-end luxury cars, as insurers offer full compensation for loss or damage.
Protection is also available for adventure activities, as many insurers extend this benefit to off-road trips.
What Does the Zero Depreciation Car Insurance Policy Cover?
Zero depreciation car insurance covers the entire cost of depreciation suffered by your car. The insurer pays 100% of the expenses without levying the applicable depreciation charge on your vehicle and its components.
What Does the Zero Depreciation Car Insurance Policy Not Cover?
Loss or damage in an accident where the driver does not possess a valid driving license
A driver is found to be under the influence of alcohol or other intoxicants during the accident.
Cars aged above five years are not covered under zero depreciation.
Regular wear & tear, engine damages, and mechanical or electrical failure
Replacement of certain parts of the vehicle, such as tires and tubes, is not covered unless they are specifically included in the policy.
Consumables such as engine oil, lubricants, nuts, bolts, and screws are generally excluded from this add-on cover.
Who Should Opt for the Zero Depreciation Cover?
New drivers, i.e. those who have started driving a car recently
Owners of high-end luxury cars or cars with expensive parts
People driving in high-risk zones that are highly prone to accidents
Lack of dedicated parking spaces for safe parking of vehicles
People who desire to maintain their vehicles in perfect condition by repairing minor dents or damages
Car owners who wish to avoid their out-of-pocket expenses to repair damages
How to Buy or Renew Zero Depreciation Car Insurance Online?
Step 1
Visit the official website of Prominent Insurance Brokers. Enter your details in the car insurance add-on quote form.
Step 2
Once you provide all the required details in this form, click the ‘Submit’ button.
Step 3
One of our executives will soon get in touch with you. You will be guided by our team to buy the best zero-dep car insurance in the UAE. You can make the payment online.
You can also click on the Whatsapp icon on this page and chat with our team members. You will be guided step-by-step to buy the policy online.
Frequently Asked Questions on Zero Depreciation Car Insurance
Zero depreciation cover is beneficial for new or expensive cars as it results in significant savings for vehicle owners. Insurers pay the full claim amount without deducting high depreciation charges.
No, The zero depreciation cover is generally available for vehicles that are less than five years old. Cars aged beyond five years are usually not eligible for this benefit.
Zero depreciation cover is an add-on policy that can be bought only with a comprehensive car insurance policy. So, you cannot buy this cover separately.
The premium is not standard for all vehicle owners. It depends on various factors such as the vehicle’s age, model, sum insured, and place of registration.
IDV in car insurance is the amount that a policyholder is eligible to get from the insurer if the vehicle is stolen or completely damaged. It is calculated by deducting the registration cost and depreciation charges from the current market price of the car.
