Zero Depreciation Car Insurance: Meaning, Benefits & Best Plans — 2025
Published: November 26, 2025 | Author: Sanjeev Kumar
Zero depreciation (also called nil depreciation) is an add-on to a comprehensive car insurance policy that removes depreciation deductions on replaced parts during claim settlement. This 2025 guide explains how zero-dep works, its benefits, limitations, who should buy it, and how to choose the best plan.
1. What is Zero Depreciation Insurance?
Zero depreciation insurance ensures that insurers do not reduce the claim amount due to depreciation on plastic, rubber, fiber, and sometimes metal parts. This results in higher claim payouts after an accident.
2. How Zero Dep Works (Example)
- Total repair bill: ₹50,000
- Normal policy payout: ~₹35,000
- Zero-dep payout: ~₹50,000 (minus deductible)
3. What Zero Dep Covers & Excludes
Covered: Plastic & fiber parts, painted panels, accidental body damage.
Excluded: Tyres, batteries, engine oil, wear & tear, mechanical failure, water ingress.
4. Benefits of Zero Depreciation Cover
- Higher claim settlement
- Lower out-of-pocket repair cost
- Best for new & premium cars
- Peace of mind
5. Limitations You Must Know
- Higher premium
- Limited number of claims (some plans allow unlimited)
- Vehicle age limit (generally 6–7 years, some up to 10 years)
6. Who Should Buy Zero Dep?
- New car owners (0–3 years)
- Luxury or high spare-cost vehicles
- High traffic driving conditions
7. How Much Does Zero Dep Cost?
Zero depreciation add-on usually increases the premium by a small percentage depending on the car model, city, and insurer.
8. Best Zero Dep Plans in 2025 – How to Choose
- Add-on cost
- Vehicle age limit
- Claim limits
- Cashless garage network
| Insurer | Vehicle Age Limit | Claims Allowed |
|---|---|---|
| ICICI Lombard | Up to 6–10 years* | 1–2 / Unlimited* |
| HDFC ERGO | Up to 6 years | 1–2* |
| Tata AIG | Up to 6–10 years* | 1–2 / Unlimited* |
*Exact terms vary by plan.
9. Claim Tips for Zero Dep Policies
- Inform insurer immediately
- Use cashless garages
- Submit documents quickly
- Confirm zero-dep application
10. FAQs
Is zero-dep the same as comprehensive insurance?
No. Zero-dep is an add-on to a comprehensive policy.
Does zero-dep cover engine damage?
No. Wear & tear and water ingress are excluded.
Can I buy zero-dep for a 7-year-old car?
Some insurers allow it depending on plan.
Does zero-dep affect NCB?
Yes, unless NCB protection add-on is taken.
11. Final Verdict
Zero depreciation insurance is highly recommended for new and premium cars. Though slightly costlier, it can save significant repair expenses during claims. If your car is new or expensive to repair, a zero-depreciation add-on often pays off by lowering out-of-pocket repair bills — but compare add-on price, exclusions, vehicle-age limits and the number of claims the add-on applies to before you purchase.
12. Smart buying & saving tips
- Compare quotes across aggregators and insurer websites.
- Buy zero-dep in early years (where depreciation is highest) and re-evaluate after 2–4 years.
- Consider NCB-protect if you want to make small claims without losing NCB.
- Always read the policy wording for exclusions and claim caps.
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