Vehicles are prone to wear and tear. It can be either due to its use or even simply due to passage of time. Whatever is its reason, its value depreciates as time goes by. Cars and bikes are no exception to this phenomenon. An engine is the heart your vehicle and it is comprised of various moving parts. Thus, depreciation is one prominent factor that impacts it.
Impact of depreciation on motor insurance
Depreciation not only impacts when selling your car, but also when raising an insurance claim. It is due to the different components required in repairs. Glass, plastic, fibre spares, and even the machines are all subjected to depreciation. Hence, the compensation for all motor insurance plans, be it bike or car insurance plan, are impacted due to depreciation.
Depreciation has a significant impact in lowering the compensation that your vehicle insurance policy has to offer. The older it is, the higher is its effect. Depreciation is calculated by considering the time duration since it has left the factor floor. And consequently, the balance cost after deducting such depreciation on the spares that require a replacement are required to be borne by you, the policyholder. Here’s when a zero-depreciation cover comes handy.
What is a zero-depreciation cover?
Zero-depreciation, commonly known as nil depreciation or even bumper-to-bumper insurance is and add-on car insurance cover that can be purchased during vehicle insurance renewal or a fresh policy purchase. Using this add-on cover, any and all effects of depreciation that lower the compensation offered by your comprehensive insurance plan can be eliminated. Thus, the insurance company excludes any such depreciation factor in effect increasing the pay-out of your insurance policy. * Standard T&C Apply
What are the benefits of choosing a zero-depreciation plan?
A zero-depreciation cover tackles the most significant limitation of a standard comprehensive policy or own-damage cover which is depreciation’s impact on the pay-out. Hence, the advantages of a nil-depreciation insurance plan are far greater.
Standard comprehensive plans that otherwise require a higher out-of-pocket expense during a claim are reduced when you choose to buy a zero-depreciation cover. The enhanced compensation offered by the zero-depreciation plan requires a minimal pay-out from your pocket limited to the deductibles of your insurance cover.
Further, this add-on cover includes most of the spares required thereby covering a larger range of spares for replacement. Hence, the investment cost is almost negligible when compared to the varied benefits it offers.
That being said, you need to remember that a zero-depreciation cover is additional and optional insurance coverage. Hence, you are required to pay higher premiums when making vehicle insurance online payment. Also, the zero-depreciation cover is offered only for vehicles that are not older than five years Hence, older vehicles cannot benefit from such additional insurance coverage.
* Standard T&C Apply
Who can benefit from buying the zero-depreciation add-on?
Zero-depreciation add-on is best suited for vehicles that are new or relatively new in case of pre-owned vehicles. As discussed above, the coverage is limited for vehicle up to five years. The most benefit of such zero-depreciation plan is for luxury car owners whose repair costs are through the roof even for minor damages. At such time, deprecation further lowering the insurance compensation can burn a hole in your wallet. Lastly, new and inexperienced drivers can take advantage since accidents and damages are prone when learning a vehicle. * Standard T&C Apply
These are the different ways how zero-depreciation add-on enhances the scope of comprehensive insurance covers. Make sure to check if the policy is added during each renewal for continued benefits. Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.