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Why Buy Zero Depreciation Cover for a 7-Year-Old Car?

Updated On Oct 15, 2023

Zero Depreciation Car Insurance After 7 Years India

In the realm of car insurance, it’s paramount for car owners to understand the nuances that can significantly affect the claim settlement amount. For those possessing a vehicle that has gracefully aged over seven years, considering a zero depreciation cover could be a wise move. Let's understand why you should get zero depreciation car insurance after 7 years. Keep reading! 

What is a Zero Depreciation Cover?

A zero depreciation cover, often known as 'zero dep', ‘'nil depreciation cover' or ‘bumper-to-bumper cover’, is an add-on policy that can be tagged along with your comprehensive car insurance policy. It ensures that in the event of a claim, the insurance provider offers the full claim without accounting for the depreciation of the car's value.

In a standard insurance policy, the claim amount is always subject to depreciation. This means that as the vehicle ages, its value decreases due to the wear and tear of its components. When you file a claim, the insurance company calculates the current value of the car, subtracts the depreciated amount from it, and then settles the claim. With a zero depreciation cover, this deduction is waived off, ensuring that you receive the full claim without any deductions for depreciation.

For vehicles that have been on the road for seven years or more, this is particularly advantageous. Typically, the value of a car would have depreciated considerably by this time. With a zero depreciation cover, however, the age and subsequent depreciation of the car do not affect the claim settlement, making it a beneficial add-on for owners of older vehicles.

Why Buy Zero Depreciation Cover for a 7-Year-Old Car?

Advantages of Zero Depreciation Cover for a 7-Year-Old Car

Given the notable age of a seven-year-old vehicle, certain parts would have undoubtedly undergone significant wear and tear, making them more susceptible to damages in the event of an accident. Here’s where a zero depreciation cover shines brightly:

  • Enhanced Claim Amount: The primary advantage is the enhanced claim amount that you receive. Without the zero dep cover, the depreciation on parts and the vehicle would lead to a substantially reduced claim amount. This add-on ensures that you get the entire claim without any deductions, significantly easing the financial burden of repairs or replacements.
  • Hassle-free Settlements: With a clear policy of no depreciation deduction, the claim settlements are often straightforward and hassle-free. The calculations are simpler and transparent, leading to quicker settlements.
  • Comprehensive Protection: For older vehicles, the risk of incurring higher costs due to parts replacement is imminent. Zero depreciation cover acts as a financial cushion, providing comprehensive protection against these potentially high expenses.

How is the Rate of Depreciation Calculated for a Car?

The rate of depreciation on a vehicle depends on several factors, with age being the predominant one. Here's a general guideline used by most insurance companies in India:

  • First 6 months: Vehicles that are less than 6 months old usually don't experience depreciation.
  • 6 months to 1 year: A depreciation rate of 5% is applied to vehicles in this age range.
  • 1-2 years: Cars that are between one to two years old tend to see a depreciation rate of around 10%.
  • 2-3 years: The depreciation rate for vehicles in this category is around 15%.
  • 3-4 years: For vehicles that are three to four years old, a depreciation rate of 25% is typically applied.
  • 4-5 years: Cars falling in this age group experience a depreciation rate of 35%.
  • 5-10 years: Vehicles aged between five to ten years have a depreciation rate ranging from 40% to 50%.
  • Above 10 years: Cars older than ten years can see a depreciation of 50% or more.

What is Excluded Under a 7-Year Zero Depreciation Cover?

Even with the considerable benefits offered by a zero depreciation cover for a seven-year-old car, there are specific exclusions you should be aware of:

  • Wear and Tear: General wear and tear or ageing of the vehicle, which is not the result of a specific accident or incident, is not covered.
  • Mechanical Breakdown: Issues arising from the mechanical breakdown of the car aren’t covered under zero depreciation policies.
  • Uninsured Perils: Damages caused due to perils which aren’t covered under the base comprehensive policy aren't covered by the zero depreciation add-on as well.
  • Deductibles: Zero depreciation cover does not pay for the compulsory deductibles which the policyholder is required to pay at the time of claim settlement.
  • Tyres and Tubes: In most cases, zero depreciation policies do not fully cover the replacement cost of tyres and tubes unless they are damaged in an accident where the vehicle is also harmed.
  • Policy Limit: There is a limit on the number of claims you can file under zero depreciation cover in a policy year. Any claims beyond this limit will be settled after considering depreciation.

Which Factors Affect the Zero Depreciation Premium of a Car?

When buying a zero depreciation cover for a seven-year-old vehicle, you must know that several factors can influence the premium rates for this additional coverage:

  • Age of the Car: Older vehicles typically attract higher premiums since they are more susceptible to wear and tear over the years.
  • Make and Model: Premium rates vary significantly depending on the make and model of the car. Luxury cars and high-end models usually have higher premiums due to the cost of their parts and repairs.
  • Fuel type of the Car: Insurers generally provide zero depreciation to petrol cars to a much larger duration than to diesel cars. For e.g. - Petrol cars can enjoy zero depreciation till 7 or 8 years while diesel cars might enjoy zero depreciation till 5 or 6 years.
  • Geographical Location: If you reside in an area prone to accidents or thefts, you might need to shell out a higher premium.
  • Claim History: Individuals with a clean claim record can enjoy lower premium rates. On the other hand, a history of multiple claims can lead to increased premiums.
  • Insurer’s Policy: Different insurance companies have various methods for calculating premiums, leading to variations in the rates offered.

Which Insurance Companies in India Offer Zero Depreciation Policies for 7 Years?

Several insurance companies in India offer zero depreciation add-on covers, though not all might provide it for cars that are seven years old. Below are some of the prominent insurers you might consider that offer zero depreciation car insurance after 7 years India:

Is It Worth Investing in Zero Depreciation for a 7-Year-Old Car?

Absolutely! If you have a car that’s seven years or older, the cumulative depreciation can considerably diminish the vehicle's current value. In the event of an accident or damage, the out-of-pocket expenses without the zero depreciation cover can be significantly high due to the reduced claim amount.

However, by opting for a zero depreciation add-on, you essentially safeguard yourself from bearing a large chunk of the repair expenses. Given that the parts of a seven-year-old vehicle would likely be at the higher end of the depreciation scale, the zero depreciation cover ensures that you are fully covered, making it a prudent investment.

Final Thoughts

It is crucial to check the terms and conditions, as well as the eligibility criteria, before opting for zero depreciation cover from any insurer. Policies and offerings may vary, aand it's essential to choose an insurance provider and a plan that aligns with your specific needs and the requirements of your seven-year-old car. Always compare the policies of different insurers and understand the inclusions and exclusions thoroughly before making a decision.


  1. Q: What exactly does a zero depreciation cover offer?

   A: A zero depreciation cover, or bumper-to-bumper insurance, ensures that at the time of a claim, the insurer doesn’t deduct the depreciation value of replaced parts, providing you with a higher claim amount.

  1. Q: Is it beneficial to opt for zero depreciation cover for older cars?

   A: Yes, as older cars have higher depreciation rates, having zero depreciation cover helps you avoid incurring significant out-of-pocket expenses during repairs.

  1. Q: Are there any exclusions under zero depreciation cover?

   A: Yes, typically, it doesn’t cover engine damage due to water ingression, oil leakage, or damage due to negligent driving.

  1. Q: Can I renew my zero depreciation cover annually?

   A: The availability of renewing zero depreciation cover for a 7-year-old car is subject to the policy of individual insurance companies.

  1. Q: Is it expensive to buy zero depreciation insurance for a 7-year-old car?

   A: Premiums for zero depreciation covers are higher than standard policies, and it might be relatively more expensive for older cars due to the higher risk associated.

  1. Q: Can zero depreciation cover be added to third-party insurance?

   A: No, zero depreciation is an add-on that can only be applied to comprehensive insurance policies.

  1. Q: How many claims can be made in a year with zero depreciation cover?

   A: The number of claims allowed can vary from insurer to insurer; it's crucial to check the policy details.

  1. Q: Does every insurer provide zero depreciation cover for a 7-year-old car?

   A: Not necessarily. The availability depends on the insurer's policy regarding the age and condition of the vehicle.

  1. Q: Will zero depreciation cover include tyres and tube replacement?

   A: Some insurers might offer coverage for tyres and tubes, while others may not. You should check the specific terms and conditions of your policy.

  1. Q: Where can I buy zero depreciation cover for my 7-year-old car?

    A: You can purchase it from various insurance providers either online through their official websites or offline through insurance agents or company offices. Always compare policies from different providers before purchasing.


This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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