There’s a well-known saying that cars lose value the second their wheels hit the road. Imagine if you could protect your car from this loss of value in insurance terms. This is where a zero dep insurance policy comes in. While regular car insurance policies offer, well, regular coverage, zero dep insurance protects the value of your car from the ravages of time. Confused? We got you. Keep reading to learn what is zero dep insurance, what benefits are and more.
What is Zero Dep Insurance?
Before we understand what is zero dep insurance, it’s vital we understand what depreciation is. Depreciation is a natural economic process wherein an object loses its monetary value over time. In car insurance, depreciation is the car’s value that is lost with time. Depreciation is a vital consideration that is factored into calculations of insurance claims. So what is zero depreciation in car insurance?
Regular car insurance policies also protect you from liabilities arising from driving; however, they dispense claims based on the value of your car when the claim is made. If your car is two or three years old, the claims you can make will be significantly lower than what you paid for the car. Similarly, if your car is stolen or totaled, you will receive the depreciated value of the car rather than the market price you paid at the moment of purchase.
Zero dep insurance, on the other hand, allows you to claim the full market price amount you paid at the time of purchase. Given their work, zero-dep policies are usually purchased as add-ons while you purchase your new car. It can, however, also be applied at the time of policy renewal.
Who Should Buy Zero Depreciation Cover?
Now that we know what is zero dep insurance, let’s discuss who should buy it.
In a nutshell, zero depreciation insurance is for anyone who wants to preserve and retain the value of their car at what they paid for it at the time of purchase. Naturally, this would be most valuable for people buying high-end luxury cars that depreciate quickly. More broadly, however, zero-dep insurance policies are a great option for new drivers and car owners as well, as it protects their investment over time.
Here are the people who should consider buying zero depreciation insurance:
- Luxury car owners
- People who are new to driving are, consequently, likely to get into small scrapes with their car as they master the learning curve
- People who live in areas with high accident rates
- People who find their cars constantly dented or bumped, but at minor levels
- People with cars that have expensive spare components
All these types of car owners stand to lose significant amounts of money maintaining their cars even with insurance policies if depreciation is taken into account when they file their claims. This is when zero dep insurance swoops in and literally saves the day by protecting your money and investment in your car. We hope now you have understood what is zero depreciation in car insurance.
What is Covered Under Zero Dep Car Insurance Plans?
With an add-on zero dep car insurance plan, you can avail more compensation during claim settlement. A zero-dep car insurance plan covers any fibre or metal body part of the car.
What is Not Covered by Zero Depreciation Vehicle Insurance Policies?
A zero-depreciation vehicle insurance policy does not provide for any mechanical breakdown.
How is Zero Depreciation Calculated?
Now that we have enlightened you on what is zero dep insurance let’s understand how it works.
IRDA (Insurance Development and Regulatory Authority of India) has fixed a set of depreciation rates for automobiles.

Depreciation Rate for Car Parts:
Plastic/ Rubber/Nylon/ Batteries – 50%
Fibre Parts – 30%
Wooden Parts – 5% first year, 10% in the second year.
Depreciation Rate for Cars (According to Age):
< 6 months = 5%
6 months – 1 year = 15%
1 year – 2 years = 20%
2 years – 3 years = 30%
3 years – 4 years = 40%
4 years – 5 years = 50%
More than 5 years = To be mutually decided between insurer and policyholder
Read More: What is Car Roadside Assistance?
How you Determine Premium?
Now that you have understood what is zero dep car insurance, let’s understand how you determine the premium in case you decide to purchase the add-on policy.
We bet that heading scared you. Worry not! We’ll take you over some of the basic factors that are considered when calculating your insurance premium.
Where is the Car Registered?
Metropolitan cities – Delhi, Mumbai, Pune, Chennai, Bangalore, etc. – generally command higher premiums than other cities.
What is the Car’s Current Market Value?
Known as the Sum Insured or the Insured Declared Value (IDV), this refers to the market value of the car being insured. This is where depreciation applies if a zero dep car insurance policy isn’t in effect.
IDV is calculated as follows:
IDV = (The manufacturer’s listing price – the depreciation experienced by the car) + (The price of accessories not accounted for in the listing price – their depreciation)
What Sort of Engine Does the Car Have?
The higher the volume and capacity of your engine, the higher the premium you pay to insure the car.
What Sort of Accessories are Installed in the Car?
Accessories command a separate premium, which is usually calculated in addition to the premium for the car.
What Add ons are you Opting for?
Add-ons such as zero depreciation covers, engine coverage, cashless garage services, etc. also add to the premium you will pay on your insurance policy
How to Buy Zero Dep Insurance Online

The internet rules the world we live in, and insurance is no different. Buying insurance online comes with many benefits, from convenience and speed to comparing policies across providers and even purchasing platforms.
Here’s how you can purchase a zero dep car insurance policy using the mighty power of the internet:
- You will need to start by providing your car’s details such as make, model, year, and so on in an online registration form.
- As you make your way through the form, be sure to select the option that offers zero depreciation insurance.
- Once you submit this form, you’ll be offered quotes with premium estimates based on the details you have provided.
- You need to get up close and personal and provide details: your name, where you will primarily be driving your car, your contact number, address, and so on.
- Once you make the payment, you’re free and insured!
- Be sure to download documentation by saving it as a PDF, taking a printout, or even emailing it yourself.
- Now that you know what zero dep insurance means and how to buy the policy, you can go ahead and buy it without thinking twice.
Benefits of a Zero Depreciation Car Insurance Policy
Now that we know what is zero dep insurance let’s understand the benefits.
Zero dep car insurance policies come with many pros, especially for people who are looking to preserve the value of their vehicle. Some of these benefits are:
Minimises Out of Pocket Costs for you.
If your car needs repairs or replacement parts, your insurance cover should take care of this. A zero dep insurance policy allows you to claim the full cost of your car’s repairs and parts without covering the difference caused by depreciation from your own pocket.
Protects your Investment in your car.
In case the worst comes to pass, and your car is totalled and needs to be replaced, a zero dep insurance policy ensures that you will get the full insured value of the car without its depreciation taken into account.
Provides Maximum Protection for your New Car
If you have invested in a new car, it’s a given that you would be much more protective of it. With a zero dep insurance cover, you retain continued coverage of your car without losing its value over time.
Factors to Consider Before Opting for Zero Depreciation Cover
Now that you know what zero dep car insurance means, here are the factors that you need to consider before opting for zero-depreciation cover:

Age Limit:
Most car insurers do not cover cars older than 5 years. So, you have to ensure that your car falls under the bracket to avail of zero-depreciation cover.
Restrictions regarding claim
Most car insurers only cover a certain limit. The number of times you can raise a claim depends on your insurance provider.
Premium
As a zero-depreciation policy allows you to maximize your claim value, the premium cost is higher; it acts as an add-on cover.
Conclusion
Now that we know what zero dep insurance means and the essential information surrounding it, buying a zero dep car insurance would become easy. Although it’s not a mandatory purchase, it’s highly suggested you buy it to get extra benefits.
FAQs
Zero dep insurance is an add-on to regular car insurance that protects the car’s value from depreciation when it comes to insurance valuations. Of course, this protection only applies in insurance terms.
Like all insurance options, your choices should be tailored to your specific needs and budget. However, generally speaking, zero dep insurance is a great option for people who own luxury cars or are new drivers who may be prone to accidents on the road.
From the moment of purchase, IDV calculations assume a depreciation of 15% in the first year. This depreciation slowly increases over the years.
Yes, buying a zero-dep policy for your new car is highly beneficial as the insured wouldn’t be required to pay the depreciation value of the replaced or damaged parts when making a claim.
Although, it depends on your insurance provider. But generally, you can claim a 0 dep cover a maximum of 2 times in a year.
No, you might not get a zero-depreciation cover beyond 7 years. Most insurers in India provide a zero-depreciation cover for 5 years.
A zero dep cover is an add-on that you can purchase on top of your car insurance. This means you have to purchase it. Additionally, it won’t be included in your car insurance. To check if your basic car insurance policy includes zero-dep, you have to contact your insurance provider.
Also Read: Engine Protection Cover in Car Insurance