What Are Common Misconceptions About Zero Depreciation Cover In Car Insurance?

Posted on: November 17, 2020, by :

Cars like any other machinery lose their value over time through wear and tear, this loss of value is called depreciation and the rate at which this occurs is called depreciation rate. With current rates, the value of your car depreciates by 20% in one year and continues to increase 10% over the following years. This rate affects the sale price of the car but also the insurance. Car Insurance claim limits are calculated according to the Insured Declared Value which is affected by the insurance rate. However, with the Zero Depreciation Cover, you can prevent the depreciation rate affecting your IDV. Before you purchase this cover, read this article to be clear of the common misconceptions around this cover.

Zero Depreciation Car Insurance - Nil Depreciation: Benefits

Understanding Zero Depreciation Cover

The zero depreciation cover provides higher claim amounts by not taking into account the depreciation rate of the car at the time the claim is made. This cover comes at a price, however, you will benefit from it greatly in case of a mishap. The option of purchasing this cover is available for cars that are not older than five years. Click here to read more about car depreciation rate.

Important Points About Zero Depreciation Cover to Remember

The following are crucial points to know if and when you buy a zero depreciation cover for your car:

1. Does Not Provide 100% Coverage: The zero depreciation cover does not give 100% coverage, it has certain exclusions. Depending on specifications of your policy you will have to pay for the mandatory policy excesses. Moreover. Other aspects such as consumables will also not be covered.

2. Limit to Number of Claims: Depending on your policy insurance companies allow a fixed number of claims per year, ranging between 1 to 3 beyond which the policyholder cannot file for zero depreciation claims. Click here to read about car insurance claim settlement.

3. Inspection of Car: If you purchase a zero depreciation cover your car will first be inspected before the claim is approved to evaluate the condition of your car.

4. Exclusions in the Zero Depreciation Cover: Damages caused due to slip-ups, usual wear and tear, total damage, water or oil ingression and damage uninsured parts of the car are not covered by the zero depreciation cover.

5. Compulsory Deductibles Are Still Payable: A zero depreciation cover does not negate the cost of compulsory deductibles in the event of a claim depending on your car’s specifications.


In an overview, a zero depreciation cover will prevent the rate of depreciation affecting the Insured Declared Value of your car when you make a claim. It is an expensive cover in comparison to others, however, the returns are assured to be positively disproportionate in case of a mishap. Before buying this cover we should be clear what it does and does not offer. A zero depreciation cover comes as an add-on to your standard insurance, there more of such useful add-ons you can purchase for your car insurance, click here read more about add-ons.