Car insurance is all about selecting the right cover. For car owners in India, it is a legal requirement to purchase motor insurance and not a choice. However, finding the best-fitting cover can be tricky as you have to strike a balance between affordability and risk coverage.
According to the Motor Vehicle (Amendment) Act, every vehicle that is driven/ parked on public roads/ places in India should be insured, and car owners who fail to comply can be fined or prosecuted.
This requirement can be met with third-party insurance that provides financial cover to the insured person against any legal liabilities arising due to loss/damage caused to a third-party person/ property.
But third-party insurance is the most basic cover, and it does not protect you or your vehicle in the event of an accident, theft, or natural calamity.
So, every car owner needs higher insurance, and this is where confusion about coverage starts – what you should cover and what you should leave. Most people go for a comprehensive plan that covers them, their car, the passengers in the car, as well as any third party involved in case of an accident.
Comprehensive insurance also protects the car against vandalism, theft, and natural calamities such as earthquakes, floods, etc.
However, even the best comprehensive plan may not give you complete vehicle coverage, making people go for add-ons. Add-on, as the name suggests, is an additional protection package you get in your insurance policy by paying some extra charges.
One such increasingly popular add-on is bumper-to-bumper, which is also known as zero depreciation or nil depreciation cover.
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What is a Zero Dep Insurance Cover?
Zero Depreciation Cover is an add-on to a comprehensive insurance policy that offers you complete coverage for all types of damages to you and your car, even rubber parts, fiberglass, plastic, nylon, and metal components that are normally excluded in a standard comprehensive policy.
As the name suggests, a Zero Dep add-on covers the entire car, leaving out only a certain type of engine damage, tires, batteries, and glasses. This insurance policy add-on is available for cars that are emerging out of the showroom as well as those that are up to five years old.
The Zero Depreciation insurance cover gives you 100% coverage if your car is damaged in an accident or because of other factors that are mentioned in the policy.
The best feature of this add-on policy is that the insurer does not take depreciation into account when you make a claim. The insurer then pays you the entire cost of the replacement of the car parts.
Depreciation is a major factor in car insurance because, for every insurer, the value of a car starts depreciating the moment it comes out of the showroom. So, when a claim is made, the insurer has to take depreciation into account.
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Exclusions in a Zero Dep Insurance Cover
Nil Depreciation add-ons have many attractive features, but it has exclusions as well. The Nil Depreciation insurance policy does not usually cover engine damage that is caused due to the leakage of the fuel or water ingression.
Similarly, if there is a change in the fuel type of the car, it may not be covered. Certain types of damage and wear and tear to the battery, tyres, gas kit, clutch plates and the bearings are also excluded.
Separate add-ons for engine protection and other exclusions are considered an option in these situations.
No insurance policy is perfect, and that is why insurance companies keep on bringing out innovative products, but bumper-to-bumper insurance can take care of the major concerns of a policyholder.
This policy comes in handy when there is a possibility of a car owner being hit with a huge bill. Yes, you have to pay over and above the regular insurance premium, but you will be assured of value for money.
You can add Zero Dep cover either at the time of buying your insurance or even later at any time.
Many insurance companies offer Nil Depreciation cover, but it’s a good idea to research products and use an online bumper-to-bumper calculator before making a decision. After all, protecting your car is our priority.
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