Zero depreciation Car Insurance – Should you opt for it?
These days zero depreciation car insurance is a very common term as far as insurance is concerned. However, first we need to understand what is depreciation before learning about zero depreciation? Depreciation is the decrease in the value of your assets or things with the passage of time. With time, every part of your car is subject to depreciation, but different premium rates are applicable to different parts. What is Zero Depreciation Car Insurance is all about? Who should consider Zero Depreciation Insurance for their Cars?
What is Zero Depreciation Car Insurance?
As the name suggests, Zero depreciation car insurance provides the comprehensive protection of your car against all physical damages without factoring in the element of depreciation. It means that you get the full settlement of the claim without any reduction in the name of depreciation. For instance, if your car is damaged due to collision, you will be able to cover the entire cost. Now lot of queries might be running into your mind which I would clarify in subsequent article.
What is the difference between the regular insurance and zero depreciation car insurance?
Premium point of view
Zero depreciation insurance definitely has an upper hand over the normal insurance. As every good thing bears a certain cost, the same thing is here. The insurer under zero depreciation has to pay a substantially higher amount of premium as compared to the normal insurance.
Value consideration at the time of settlement of claim
Under the normal insurance, the depreciated value of the car is taken into account and the claim is settled according to that value while under zero depreciation, the factor of depreciation is not considered and full value of the car is taken for settlement of claim.
Age of the car
Zero depreciation policy is usually taken on the new cars or relatively new cars. Very old and second hand car owners opt for the normal policy.
Bearing of cost
Under the normal policy, the insurer has to pay that portion of the expenditure which is not borne by the insurance company while he need not shell his money out under the other policy as the insurance company will be paying the whole amount. He is mentally relaxed and free.
What points to be considered before opting for a car insurance policy?
- Costs: The premium of the zero depreciation policy is relatively higher than the normal policy, approximately about 20% higher. So, the insurer who is willing to pay such elevated costs should go for it as it ensures peace of mind. However, in case of any damage to the car, the insurer does not have to coin out any money from his pocket.
- Age: If you are buying a brand new car, you can go for zero depreciation. For older cars, say by 3 years , one should go for normal policy. It is not advisable to pay heavy premiums for the older cars.
- Chances of accident: A zero depreciation insurance is more needed for the drivers who are relatively new and inexperienced and thus, more prone to accidents. You can claim and get the insurance cover without paying anything out of your pockets.
- Number of claims: Generally, the insurer restricts the limit of claim, say one or two in a year. This is done to avoid the insured from claiming for every small dent and damage. Before taking a policy, one should check the number of claims and approach the insurer only for the bigger amounts.
Should you opt for Zero Depreciation Car Insurance?
It is a wise decision to take zero depreciation cover only in the case the car is new. It would cover all the threats and fear of physical damages of the car. But, one should be willing to pay the extra premium charged as every good thing comes for an extra cost only. Many people think that it is useful only in the case of new drivers. But, it is not true because even the most experienced drivers can damage the car due to other’s mistakes.
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Zero depreciation Car Insurance