Distinction between Comprehensive and Zero Depreciation Insurance

A car insurance is a mandatory requirement underneath the Motor Vehicles Act, 1988. However, the Act mandates only a third party cover which protects third party interests in any contingency. If you want to secure coverage for the damages suffered by your own vehicle, you should opt for a comprehensive policy. Furthermore, to grow the scope of coverage of the comprehensive policy, you can choose a zero depreciation cover as well. 

Let’s comprehend the concepts of comprehensive vs zero dep coverage options and also have a look at their comparative analysis.

What is really a car insurance policy?

A comprehensive car insurance policy is a that covers third party liabilities as well as the damages suffered by the car itself. The insurance policy is disseminated for one year and then renew it provided you own an automobile.

What is really a zero depreciation car insurance policy?

A car insurance policy does not cover the depreciation suffered by the areas of the car because of normal wear and tear. As such, when a claim is made, the appropriate depreciation is deducted in the claim amount leaving you to pay the depreciation cost out of your own pockets. A zero depreciation policy protects you against such out-of-pocket expenses. It is a car insurance policy which includes the zero depreciation add-on. The insurance policy covers third party liabilities, the damages suffered through the car along with the depreciation suffered through the car’s parts. If there is a claim, the insurance company does not deduct any depreciation in the parts repaired or replaced. It pays the entire repair costs incurred. 

In simpler terms, a zero depreciation policy is a comprehensive car insurance policy using the added coverage of a zero depreciation add-on.

Applicable depreciation rates on zero dep vs comprehensive plans

Here would be the applicable depreciation rates which may be applied on your car’s parts in a comprehensive vs zero dep policy –

Suppose claims occurs wherein the rubber parts are repaired for around INR 20,000 and also the fibreglass parts are repaired at a cost of INR 10,000. The claim payable under a zero dep vs comprehensive plan could be the following –

While in the comprehensive policy you would need to bear a depreciation price of INR 13,000 , inside a zero depreciation policy you wouldn't have to bear any depreciation cost. The total claim of INR 30,000 could be paid by the insurance company.

Comparative analysis of comprehensive insurance vs zero depreciation insurance

Here is a comparative consider comprehensive insurance vs zero depreciation insurance for you to understand both these plans easily –

1. Similarities
   • Both plans cover 3rd party liabilities in addition to damages suffered through the car
   • Both the plans are voluntary in nature
   • Both the plans allow no claim bonus discounts as well as other premium reduced prices for safety gadgets, membership of Automobile Association, etc.
   • Cashless claims are permitted under both plans
   • The coverage duration of both policies is a year
   • You can pick other add-on coverage benefits with both plans
2. Differences
   

   Points of difference	Comprehensive insurance	Zero depreciation insurance
   Scope of cover	Coverage for 3rd party liability and own damage only	Coverage for 3rd party liability, own damage and depreciation on the car’s parts
   Premium	Lower when compared with zero depreciation policy	Higher due to wider coverage
   Claim pay-out	Lower because depreciation is deducted from the claim amount	Higher because depreciation is not deducted from the claim amount
   Availability	Available for cars of ages	Available for cars aged as much as 5 years
   Number of claims	Unlimited claims can be created so long as the IDV from the policy is not used up	There may well be a limitation on the number of claims for zero depreciation that you could make.

Should you buy a zero depreciation cover?

The repairs from the car, especially in case of severe damages, incur considerable amounts of cash. Moreover, in case your car is definitely an expensive one, the costs can be financially damaging. A zero depreciation policy, therefore, is a better option for ensuring that your out-of-pocket expenses are reduced. It possesses a wider scope of coverage and enables you to obtain a higher settlement during the time of claims. So, it is always better to choose a zero depreciation cover your car.

That being said, when buying a zero depreciation cover, you should always compare the premiums across several insurance providers. Every company features its own pricing policy and thus, the premiums differ across different insurers. Add some zero depreciation add-on towards the coverage and compare the premiums across insurers. Select a policy that provides the cheapest premium without compromising on the Insured Declared Value or even the coverage from the policy.

To compare, you can choose Turtlemint that provides the choice of the best zero depreciation plans available in the market. Visit https://www.turtlemint.com/car-insurance/ and enter your vehicle details to look into the quotes of leading insurers. Compare and choose the very best zero depreciation policy and insure your car under the widest coverage.

Frequently Asked Questions

1. How many claims can one make under a zero depreciation cover?

   The maximum limit to zero depreciation claims depends upon the insurance company where you purchase the insurance policy. Usually, a lot of companies allow no more than two claims during the policy tenure. Some companies, however, also allow unlimited zero depreciation claims using their plans. So, find out the limit when purchasing the insurance policy so that you know the number of claims can be created on the zero depreciation basis.

2. Can I convert my comprehensive policy to a zero depreciation policy?

   Yes, you can include the zero depreciation add-on for your comprehensive car insurance policy and morph it into a zero depreciation policy. This addition can be done either at the time of purchasing a new policy or when renewing an existing one.

3. Is an additional 3rd party policy required with zero depreciation cover?

   No, you don’t have to buy an additional third party cover using the zero depreciation policy. This is because the third party coverage comes inbuilt within the zero depreciation policy itself.

4. Can I opt-out of the zero depreciation cover?

   Yes, during the time of renewal from the car insurance policy, you are able to opt-out of zero depreciation cover by opting from the zero depreciation add-on benefit. Moreover, once your car is much more than 5 years old, the zero depreciation cover would automatically be removed whenever your policy is renewed in the sixth year.

5. Do all insurers offer zero depreciation insurance?

   Yes, all general insurance companies that provide a comprehensive car insurance policy offer zero depreciation add-on. You can include the add-on to the comprehensive policy to choose the zero depreciation cover.