Understanding Zero Depreciation Cover in Car Insurance

Understanding Zero Depreciation Cover in Car Insurance


GlobalLinker Staff

GlobalLinker Staff

2 Apr 2015, 14:13 — 3 min read

A zero depreciation cover in car insurance ensures that in case of a claim, you will receive the full value without any deduction for depreciation on the value of the parts replaced.

Depreciation is the decrease in value of an asset over a period of time. A cars’ value depreciates over time, and this affects claim settlements in car insurance. When you file a claim, your car insurer employs a formula to determine the amount payable. This formula factors in depreciation, leaving you to pay a sizeable fraction of the overall costs.

Here are few handy facts to consider while considering Zero Depriciation Cover for your car:


  1. Difference between a Standard Comprehensive Cover & Zero Depreciation Cover
    Zero depreciation cover promises full settlement coverage in case of an accident, without taking into account depreciation.

    Standard comprehensive cover makes estimations based on the 'current value' of your vehicle. 'Current value' factors in the depreciation on your vehicle. Consequently, if your car is involved in an accident, your standard policy will reflect the bill after subtracting for depreciation whereas the zero depreciation policy will reimburse the entire repair cost, regardless of the current value of your car.

  2. Does Zero Depreciation Cover have significant advantage?
    Clearly, the zero depreciation cover has its advantages over standard coverage. However,it comes at a price. To begin with, a policy with zero depreciation cover will cost almost more than 20 percent of a standard policy.This means that you will have to pay a higher premium. To patrons seeking affordable insurance, this could be a real deal breaker. On the other hand, the prospect of zero depreciation will appeal to customers who are willing to pay the higher annual rates because it guarantees peace of mind.

    Within a zero depreciation cover, one can make a limited number of claims annually. Furthermore, the zero depreciation cover applies only to cars that are up to three years old.

  3. Exclusions within Zero Depreciation Cover
    Few conditions are not covered under the zero depreciation cover. These are:
    Tenure of Zero Depreciation Cover
    The tenure of zero depreciation policy is normally one year and has to be renewed annually. You can buy depreciation cover online along with your car insurance policy.
    • Wear and tear
    • Damage to uninsured items like accessories and bi-fuel/gas kit, tyres
    • Damage due to uninsured peril
    • Damage due to mechanical breakdown

It is useful to optimise your car insurance to cover all eventualities. 



Posted by

GlobalLinker Staff

We are a team of experienced industry professionals committed to sharing our knowledge and skills with small & medium enterprises.