All That You Need To Know About Zero Depreciation In Motor Insurance

Zero Depreciation is one of the very popular motor insurance rider available in today’s insurance market. In the event of a car accident, it can be extremely disappointing to find out that your insurance claim covers only a part of the expenses incurred for the repair of damages as a big chunk of your insurance claim has been eaten up by depreciation.

A zero depreciation insurance cover can be worth buying to avoid such unwanted situation.

Difference between zero depreciation car insurance and standard car insurance
A standard insurance will cover the losses you may incur if a car is stolen or damaged. But it comes as a surprise to you that you will not be entitled to a hundred percent reimbursement of the expenses you incurred on repairs made. As per policy norms, your insurer deducts some depreciation charges from your claim, also known as charges for normal wear and tear. Hence, only the residual value, left after deducting the depreciation is paid to you.

On the other hand, a zero depreciation insurance entitles you a complete coverage without considering any depreciation cost. So, in the event where your car or any of it part gets damaged, your insurer will pay you the full amount.

Rates of Depreciation

Depreciation primarily means the loss of value of an asset due to wear and tear. Different parts of car have different rates of depreciation pre decided by the insurance policy. The rates are:
·        50% for parts of high wear and tear like plastic, rubber parts, battery, tyres etc.
·        30% depreciation on fibre glass parts
·        0 to 50% for metallic parts, varying with the age of vehicle.

Why is a zero depreciation rider a good choice?

Who does not want to be compensated for the entire cost incurred on the replacement of damaged car parts? High rates of depreciation reduce your insurance claim amount, hence making your insurance hardly helpful to you in the time of need. When you receive full claim for the repair of damaged parts, you have one thing less to worry about at this time of stress. Also, this add on lets you take the maximum worth out of your motor insurance policy.

What is the additional premium to be paid to avail this rider?

The additional premium to be paid is generally up to 20% of your standard vehicle insurance policy but can vary on the basis of your insurer, model and make of your car and your place of residence.

Is zero depreciation cover a good choice for you?
It makes sense to get a zero depreciation cover if:
·        Your car is new
·        You have a high end luxury car
·        If you are a new drive or have a history of accidents
·        If you regularly pass by or live in an area with high risks of car damage

How often the policy needs to be renewed?

The usual tenure of a basic car insurance policy is one year and needs to be renewed on annual basis. So, the add-on too needs to be renewed along with your basic motor insurance policy. You also need to know that there is a limit to the number of claims you can make in a year with this add-on. Usually, up to two claims are permitted, but the scenario may vary as per the insurer. 

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