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Insurance Article

Zero Depreciation Rider - The Right Choice for Your Car

November 16 2015
car-repairs-and-insurance-surveyors

Opt for zero deduction in insurance claims for a comprehensive coverage

Zero Depreciation Rider

Riders are add-ons to an existing policy that are offered to the policy holders against an extra amount of premium. As the name suggests, Zero Depreciation Rider covers the total cost of your car without factoring in for depreciation. As against a standard insurance plan, which considers the depreciated value of the car (i.e. the present value), this rider guarantees full claim amount with no deduction for depreciation.

Zero Depreciation against Standard Cover

Mr. A and Mr. B meet with a car accident and both their cars were seriously damaged. While Mr. A enjoyed a Zero Depreciation rider over and above his standard policy, Mr. B had taken up astandard scheme for the same. Both their cars suffered a loss of Rs. 1 Lakh but their claim receivable varied because of the Zero Depreciation cover.

Mr. A - Zero Depreciation Plan
Mr. B - Standard Car Insurance Plan
Loss = Rs. 1,00,000 Loss = Rs. 1,00,000
Depreciation is not factored in, (i.e. zero deduction) Depreciation deducted @30%*
Claim Receivable = Rs. 1,00,000 Claim receivable = Rs. 70,000
* Note that the insurer calculates and ascertains the final claim payable after applying a set of complex formulae. The above rate of flat 30% is only for understanding.

The Zero Depreciation Advantage

A major advantage of taking up Zero Depreciation is that at the time of damage, your policy covers each and every penny expensed out for repairs. There is no need for you to spend any out-of-pocket cash as you enjoy full settlement from the insurance company.

Zero Depreciation Extras

Why should you take this up?

Policy holders need to pay an extra premium amount over and above their standard rates in order to enjoy the benefits of this add-on. This extra penny today, lends you peace of mind and a fuss-free future during the times of crisis.

What are its ceiling points?

  • To maintain the good faith of the scheme, there is a cap on the number of claims in a year per policy. This is so that the insurance money is not tapped unreasonably for minor dents and damages.
  • This rider is applicable only to insurance cover for new cars whose age ranges from 0 to 3 years. In the advantage of the policy holders, the benefit can only be availed for new cars.

It is only you who can ascertain the best scheme and rider for your vehicle. Explore the insurance provider's website and speak to their executives to understand the insurance policy and riders in detail.

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