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What is Zero Debt or Zero Depreciation in Car Insurance?

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Car insurance comes with something known as Zero Dep Policy. Find out what it entails and how you can benefit from it.

A Zero Debt insurance policy, also known as Zero Dep Policy, Nil Depreciation, or Bumper-to-Bumper cover, is a popular add-on under the own-damage section of the car insurance policy. The zero debt policy is available and popular among car owners as claim settlements are taken care of without factoring in the depreciation amount in case of accidents or insurance claims.  

How the Zero Dep Cover works

There are a number of features that make people opt for the Zero Dep Cover add-on. It's primarily popular because it ensures you receive full settlement coverage without considering the vehicle's age, unlike a standard comprehensive cover that estimates the coverage based on your vehicle's 'current value.'   

Here are some considerations to keep in mind about the cover:  

  • The policy is not available for commercial vehicles in India.  
  • Usually, a Zero Dep Insurance Policy premium is higher than a standard insurance policy, offering better coverage than a regular comprehensive insurance policy.  
  • The claim process is usually quicker and more efficient as there is no need to calculate the depreciation of the vehicle's damaged parts.  
  • Usually, only new cars in India can take a Zero Dep Policy.  
  • Your insurance company may or may not allow claim settlements multiple times yearly. This means you may or may not be permitted to claim insurance more than once annually. You must thoroughly enquire with the insurance agent and understand the terms and conditions.  
  • It won't be unusual if you are denied a Zero Dep Policy after your car has turned 5 years old. However, based on your previous claim settlements and no claim bonuses, certain insurers may allow you to extend the add-on by a year or two.  
  • Zero depreciation car insurance policy extends coverage only against depreciation costs of a car's parts and does not cover compulsory deductibles of your vehicle.  

It is best to compare policies and understand their terms and conditions from different companies before choosing to opt for insurance. Consult your insurance adviser or an expert before buying the policy if in doubt.