Why You Should Invest In A Zero Depreciation Add-On For Your New Car

New cars are expensive to repair, and standard insurance policies deduct depreciation while settling claims. This can lower the payout even for minor damage and zero-dep car insurance is designed to reduce these deductions.

Designed to limit depreciation deductions on replaced parts, this add-on helps new car owners manage repair expenses more effectively during the early years of ownership.

What is Zero Depreciation Cover?

Zero depreciation cover is an add-on that reduces or eliminates the impact of depreciation on certain car parts during claim settlement. In a standard policy, insurers deduct depreciation on components such as plastic, rubber, fibre and metal parts before approving the claim amount. With zero-dep car insurance cover, these deductions are either waived or reduced, resulting in a higher claim payout compared to a basic policy.

How Depreciation Affects Car Insurance Claims?

Depreciation is applied to various car parts based on their age and material. For instance, plastic and rubber components often attract high depreciation, while metal parts are subject to percentage-based deductions. In the event of an accident, these deductions can substantially lower the insurer’s payout, even if the damage is minor. Zero depreciation cover reduces this gap, ensuring repair bills do not escalate unnecessarily.

Key Benefits of Zero Depreciation for New Cars

Zero depreciation add-on offers multiple advantages for new car owners during car insurance renewal or purchase:

●       Higher claim settlement amounts since depreciation on commonly damaged parts like plastic, fibre and metal components is not deducted.

●       Reduced out-of-pocket expenses during repairs, as the insurer bears a large portion of the replacement costs.

●       Better cost predictability, especially in the first few years when repair bills can be unexpectedly high.

●       Suitable for cars with expensive body panels or advanced components, where even minor damage can result in significant repair costs.

When Zero Depreciation is Most Useful

This add-on is most beneficial during the initial years of a car’s life, typically up to five years, depending on insurer terms. It is usually useful for:

●       New or high-value cars.

●       Vehicles that are driven daily in traffic-heavy areas.

●       Owners who are concerned about rising spare parts and labour costs.

While the premium is slightly higher, the overall cost-benefit can be favourable over time.

Is Zero Depreciation Worth the Extra Premium

Cost vs Long-Term Savings

Zero depreciation does increase the premium slightly, but the difference is often noticeable only at the time of repairs. Under a regular policy, deductions on plastic and metal parts can significantly reduce the amount approved in a claim. If repairs are needed more than once, those deductions can add up to more than the cost of the add-on.

Real-Life Claim Scenarios

In cases such as bumper or body panel damage from a minor accident, a regular policy may cover only part of the repair cost due to depreciation. With zero depreciation cover, most of these deductions are avoided, resulting in a higher claim payout and lower personal expenses.

Secure Your Vehicle with TATA AIG’s Zero Depreciation Cover

Zero-dep car insurance cover helps reduce the financial impact of repairs by limiting depreciation-related deductions during claim settlement. For new car owners, it offers better control over repair costs and claim outcomes.

Insurers like TATA AIG offer zero depreciation add-ons that can be included during policy purchase or renewal, allowing coverage to remain aligned with the vehicle’s age and usage. Reviewing add-ons carefully at renewal ensures the insurance continues to match the car’s protection needs without unnecessary compromises.

Published on: Friday, December 26, 2025, 04:38 PM IST