Zero Depreciation in Car Insurance

Zero depreciation cover is a car insurance add-on that eliminates the impact of depreciation on your insurance claims. This valuable add-on enhances the financial protection for your vehicle by ensuring you receive the full claim amount without any deductions.

Typically, when you file a claim, insurance companies deduct depreciation based on your vehicle's age and the specific parts being replaced. However, when you purchase zero depreciation cover, you receive maximum compensation without these deductions.

For instance, suppose you have accidentally damaged your car bumper while heading out, and the repair cost is ₹10,000. With zero depreciation cover, you will receive the full ₹10,000 repair amount from the insurance, with minimal out-of-pocket expenses, such as a deductible (if applicable).

Also Read: Car Insurance Add-Ons

Whether you are a new car owner or a luxury car owner, having a zero depreciation cover as part of your car insurance policy is a valuable addition for vehicle owners. Here are some of the advantages of this add-on.

Reduced Out-of-Pocket Expenses

This add-on significantly reduces your financial burden during claims by eliminating depreciation deductions. Instead of paying thousands from your pocket for depreciated part values, you receive full compensation, reducing out-of-pocket expenses to nearly zero except for deductibles.

Enhanced Car Resale Value

Zero depreciation ensures complete repairs using quality parts without compromising on standards. Well-maintained vehicles with proper claim settlements tend to retain higher market values, making your car more attractive to potential buyers when you sell.

Full Claim Settlement

The nil depreciation cover helps in getting complete compensation for repairs without any depreciation deductions. Instead of reduced payouts based on part age, you get the full repair cost. This eliminates financial gaps between actual expenses and the amounts covered by insurance claims.

Covers Various Car Parts

With this add-on, various car parts, including plastic, rubber, fibre, and metal parts, are covered without considering depreciated values. From expensive bumpers to headlights and mirrors, every component receives maximum protection regardless of material type under this add-on.

Also Read: How Can Zero Depreciation Cover Be Beneficial During Claims?

Depreciation is the reduction in a car’s value over time due to factors such as age, usage, and wear and tear. As your car gets older, its value decreases. In car insurance, depreciation plays a role in the amount you can claim. When you file a claim, the insurer reduces the payout by the depreciation value of your car’s parts, meaning you receive less money for repairs or replacements.

The Insurance Regulatory and Development Authority of India (IRDAI) sets the standard depreciation rates for vehicles in India. These rates depend on the age of your car and are used by insurers to calculate the depreciation amount when determining the claim value. This can result in a lower payout, especially for older cars.

Depreciation Rates for Car Components

Depreciation Based on Vehicle Age

TATA AIG offers depreciation reimbursement, a zero-depreciation add-on that reimburses the depreciation amount deducted from your car insurance claims. This coverage essentially eliminates the financial impact of depreciation on your claim settlements.

When you file an own-damage claim under your policy, depreciation is generally deducted based on your vehicle's age and the parts being replaced. For example, plastic parts, such as bumpers, can have up to 50% depreciation deducted, while metal parts face depreciation ranging from 5% to 50%, depending on the vehicle's age.

With this coverage, TATA AIG reimburses this entire depreciation amount, ensuring you receive the full replacement cost. This add-on covers up to the first 2 claims reported during your policy period, providing substantial financial protection for multiple incidents. However, it only applies when actual part replacement occurs and depreciation is deducted from the claim.

However, for nil depreciation cover to work properly, the four-wheeler must be repaired at a TATA AIG authorised garage, workshop, or service station.

Zero depreciation add-on is a valuable enhancement to a car insurance plan. Let us understand the zero depreciation cover working by example.

Car Insurance without Zero Depreciation Cover

Rahul has bought a car insurance policy without nil depreciation cover. The car was involved in an accident and requires replacement and repair of fibreglass components, which cost around ₹20,000.

Since he does not have a zero depreciation cover, deduction will be applied to fibre parts, which
cost around ₹6,000, plus any deductible amount if applicable. As a result, Rahul will only receive ₹12,000 - ₹14,000 as a claim amount and will need to pay the rest of the repair money out of their pocket.

Car Insurance with Zero Depreciation Cover

Now, let us consider the same scenario where Rahul has purchased zero depreciation cover with his car insurance policy. When his car meets with the same accident requiring ₹20,000 worth of fibreglass component replacement and repairs, the outcome would be significantly different.

With zero depreciation cover, no depreciation deduction would be applied to the fibreglass parts. Instead of receiving only ₹14,000 after the 30% depreciation deduction, Rahul would receive the full ₹20,000 claim amount minus only the standard deductible, if applicable. This means his out-of-pocket expense would be minimal, potentially just the deductible amount of ₹1,000-₹2,000, depending on his policy terms.

Disclaimer: Refer to the policy document for accurate information on the inclusion and exclusion of zero depreciation.

When considering a zero depreciation add-on in car insurance, certain factors should be taken into account to make an informed decision.

Age of Vehicle

The first thing to consider when purchasing a zero depreciation add-on in car insurance is the age of the vehicle. Usually, the cover is applicable for newer cars. The age of the vehicle may vary from insurance provider to provider. Therefore, when purchasing this add-on, it is crucial to check the vehicle's age. TATA AIG offers zero depreciation coverage for vehicles that are less than 5 years old.

Inclusion and Exclusion

Another thing to consider when purchasing zero or nil depreciation cover is what is covered under the plan and what is not. TATA AIG zero depreciation add-on offers coverage to vehicle parts made of plastic, rubber, fibre, and metal components without applying depreciation deductions. However, normal wear and tear, as well as damage resulting from illegal activities, are generally not covered.

Cost or Premium

When choosing the zero depreciation add-on in car insurance, you also need to consider its cost or premium. Adding the cover in a car insurance plan generally increases the premium amount marginally. The zero depreciation premium depends on your vehicle's age, make, model, and cubic capacity. TATA AIG zero depreciation add-on is available at an affordable price.

Claim Limit

The add-on comes with restrictions on the number of claims you can file during a policy year. This ensures that the coverage remains financially viable for insurers while still providing substantial protection for policyholders. TATA AIG allows a maximum of 2 claims per policy period under this add-on for vehicle own-damage.

Buy Zero Depreciation Add-on With Car Insurance

• Open the TATA AIG website, head to the “Personal” tab and click on the “Car Insurance” under the Motor Insurance section.
• Next, fill in the car details, such as registration number, make, model, variant, etc., and then click the “Submit” button.
• Different car insurance options are available; choose the plan accordingly, and then add the zero depreciation cover.
• Review the policy carefully and fill in the personal details, such as name, contact number, and email address.
• Once reviewed, make a payment using a preferred method, such as a credit or debit card.
• After successful payment, the car insurance with zero depreciation will be sent directly to your email address.

Renew Zero Depreciation Add-on With Car Insurance

• To renew your car insurance with nil depreciation cover, visit the TATA AIG car insurance page and click on the “Renew your existing policy” option.
• Next, enter the existing car insurance policy details, such as the policy number and vehicle registration number.
• Review the plan carefully and include the zero depreciation add-on if it is already included in the existing plan.
• Verify your personal details, including name, email address, and other relevant information, before purchasing a plan.
• Once everything is verified, proceed to the payment option for making a payment for car insurance with a zero depreciation add-on.
• Once the payment is made, the renewed car insurance policy with zero depreciation cover will be sent directly to your email address.

Cashless Claims

• To file a cashless claim, you need to notify TATA AIG through self-service portal, or helpline numbers (02264898282).
• After notifying, take your vehicle to the authorised network garage.
• The representative will assign a surveyor to inspect the vehicle for damage and verify the documents.
• Upon approval of the cashless claim, the network garage will initiate the vehicle repair process.
• Once the network garage does the repair work, TATA AIG will settle the bill directly with the garage.

Reimbursement Claims

• To file a reimbursement claim, you need to notify the TATA AIG representative about the incident. This can be done through the self-service portal or calling the helpline number (02264898282).
• Next, take your vehicles to any garage of your choice and pay a repair fee.
• Collect all documents from the garage owner, including repair bills and invoices.
• File a claim at the TATA AIG claim page and submit all the required documents.
• The TATA AIG representative will review the claim and verify documents, and then approve or reject the claim request.

Also Read: Car Insurance Claim Process

Also Read: Zero Depreciation vs Return to Invoice

Zero depreciation add-on transforms your car insurance online from basic coverage into comprehensive financial protection, ensuring you receive complete compensation without any depreciation deductions during claims.

It is a valuable addition to car insurance in India, where the depreciation cuts on plastic, rubber, fibre, and metal parts are high. The cover will help in receiving the full repair amount, saving out-of-pocket expenses in need.

We at TATA AIG offer a comprehensive car insurance plan with a nil depreciation cover. It is specifically designed for vehicles up to 5 years old, offering generous coverage that allows up to 2 claims per policy period.

The add-on offers savings during claims, making it particularly beneficial for new car owners, luxury vehicle users, and frequent drivers who understand that quality repairs shouldn't compromise their finances. With our fast and quick process, you can buy and do car insurance renewal in just a couple of minutes.

Along with this, TATA AIG car policy offers various other benefits, including cashless claims at network garages, a no-claim bonus benefit, 24/7 customer support, and more, to all our policyholders. Get your car protected with our customised and affordable car insurance plan, featuring nil depreciation cover, now.