Zero Depreciation Car Insurance

Get the Best Insurance Plan that fits for your Need

savings on car insurance plan

Get a Quote for Car Insurance

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.

Why Watania Takaful Car Insurance

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.

car vector art

Depreciation Rate for Car Parts

The applicable depreciation rates on replacement are as follows, The Insured Declared Value (IDV) is the maximum amount paid by the insurer toward the claim after deducting the applicable depreciation charges.

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


6 months to 1 year


1 year to 2 years


1 year to 2 years


3 years to 4 years


4 years to 5 years


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

Depreciation is one of the primary factors that determines the car’s insured declared value (IDV). Depreciation is the gradual reduction in the vehicle’s value over time due to regular wear & tear, usage, and obsolescence. So older cars suffer a relatively higher depreciation. Two cars of the same type may have different IDVs if the year of manufacture is not the same.

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

While a comprehensive car insurance policy is a standalone product, the zero depreciation cover is an add-on policy that offers enhanced protection. Add-on covers can only be purchased along with a comprehensive policy. The other differences between the two are outlined in the table below:

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


The premium is higher when you buy an add-on cover


The premium is lower without an add-on cover


Lower due to enhanced protection


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

The best zero-dep car insurance coverage offers the following benefits to policyholders:

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?

The general exclusions of zero depreciation cover are listed below:

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?

Zero depreciation car insurance is ideal for the following types of vehicle owners:

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?

Please follow the steps listed below to purchase or renew the zero-dep 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.