Zero Depreciation Car Insurance: Meaning, Benefits & Best Plans — 2025
Zero depreciation (also called nil depreciation) is an add-on to a comprehensive motor insurance policy that reduces or eliminates the depreciation deduction the insurer applies to replaced parts at claim settlement. This guide explains how zero-dep works, the benefits and limits, who should buy it, and how to choose the best plan in 2025.
1. What is zero depreciation (zero-dep)?
Zero depreciation is an add-on to a comprehensive car insurance policy. When opted for, the insurer does not (or only minimally) deduct depreciation on certain parts at the time of settlement — meaning you receive a higher claim payout for replaced parts. It is ideal for new cars or models with high spare-part costs. **Updated (2025):** Several insurers now offer zero-depreciation for vehicles up to **10 years** of age and some also provide **unlimited claim** options — verify the exact terms with the insurer before buying.
2. How zero-dep actually works (simple example)
Example:
- Repair bill: ₹50,000
- Normal policy (with depreciation): depreciation ₹15,000 → insurer pays ₹35,000 (+ deductible)
- With zero-dep: insurer pays full ₹50,000 minus only compulsory deductible
3. What zero-dep covers — and what it usually DOES NOT cover
Commonly included items: plastic/fiber parts, painted panels and many replacement parts for accidental damage. Common exclusions: consumables (engine oil), tyres & tubes, batteries (sometimes), and mechanical failures from wear & tear. Also, engine water-ingress damage is often excluded or limited even with zero-dep.
4. Benefits — why people buy zero-dep
- Lower out-of-pocket repair costs, especially for new cars.
- Predictable claim payouts on parts with high depreciation.
- Better value for premium cars with expensive spares.
- Peace of mind after an accident.
5. Downsides & limitations you must know
- Increases your annual premium.
- May be restricted to a set number of claims (e.g., 1–2 partial claims). However, from 2024–25 several insurers launched plans that allow **unlimited zero-dep claims** or extended claim caps — always confirm with the insurer's product brochure.
- Often available only up to a vehicle-age limit (insurers commonly cap at around 6–7 years).
- Some items remain excluded even with zero-dep.
6. Who should buy zero-dep?
Good candidates:
- New cars (0–3 years) or up to the insurer's stated age limit.
- Premium/luxury models with expensive spare parts.
- Drivers in high-traffic or higher-risk conditions.
7. How much extra does it cost?
Cost varies by insurer, car model, IDV, and city. The add-on typically increases the comprehensive premium by a small-to-moderate percentage. Always compare live quotes from multiple insurers.
8. Best plans / insurers for zero-dep in 2025 — how to pick one
There is no single winner; choose based on:
- Add-on price for zero-dep
- Exact exclusions and claim caps
- Cashless garage network and proximity to you
- Claim settlement service & reviews
Comparison table (sample fields to gather)
| Insurer | Add-on price | Max vehicle age | Claims covered | Consumables/Tyres |
|---|---|---|---|---|
| ICICI Lombard | ₹ — (quote) | Up to 6.5 years (many insurers) — **or in some plans up to 10 years** | 1–2* (some insurers now offer unlimited claims) | Excluded |
| HDFC ERGO | ₹ — (quote) | Up to 6 years | 1–2* (some insurers now offer unlimited claims) | Excluded |
| Tata AIG | ₹ — (quote) | Up to 6.5 years (many insurers) — **or in some plans up to 10 years** | 1–2* (some insurers now offer unlimited claims) | Excluded |
Note: Replace sample prices with live quotes. "Claims covered" refers to how many partial-loss claims zero-dep will fully apply to — verify on the policy document.
9. Claim process tips (so zero-dep actually helps you)
- Intimate the insurer immediately after an accident.
- Use insurer-listed cashless garages if possible.
- Provide documents — policy copy, RC, driver's licence, FIR (if required), photos and repair estimates.
- Confirm zero-dep application during settlement; request written reasons if denied and escalate if necessary.
10. FAQ
Is zero-dep the same as comprehensive insurance?
Does zero-dep cover engine damage?
Can I buy zero-dep if my car is 7 years old?
Does zero-dep affect my No Claim Bonus (NCB)?
11. 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.
12. TL;DR
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.
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