Difference: Zero Depreciation vs Comprehensive Car Insurance

Published On Sep 23, 2019 5:30 AM By InsuranceDekho

Difference Between Zero Depreciation and Comprehensive Car Insurance

Car insurance is a type of general insurance and can be availed in three forms namely own damage car insurance policy, third party car insurance policy and comprehensive car insurance policy.

As per the Indian Motor Tariff, it is mandatory for every car owner to have at least third party car insurance. Besides these three types of car insurance policies, there are also a number of car insurance add-ons that can be opted for with the standalone OD policy and comprehensive car insurance policy. A car add-on is an extra cover that enhances the coverage of a standard policy for an extra premium. The most popular and mostly-opted add-on is the zero depreciation add-on.

What is a comprehensive car insurance policy?

Comprehensive car insurance is a policy that insures the policyholder against both the third party liabilities (both life and property) as well as own damages that may arise due to a road accident or any other unfortunate event involving the insured car. Under a comprehensive policy, limited/unlimited coverage is provided for bodily injuries/death of a third party and a compensation cover of up to Rs 7.5 lakh for third party property damage. All own damages sustained by insured car in any mishap are also covered under a comprehensive policy.

A comprehensive policy can be customized using a variety of add-ons available with it such as zero depreciation cover, engine cover, No Claim Bonus (NCB) cover, etc. against extra premiums. These add-on covers provide enhanced safety and coverage of the insured car.

What is car insurance zero depreciation cover?

Car Insurance for zero depreciation insurance cover is a car insurance add-on, also known as a nil depreciation cover and ‘bumper to bumper’ cover. Depreciation refers to the loss in value incurred by any commodity due to wear and tear over time.

By default, the liability to pay for the depreciation of an insured car rests with the policyholder, however, if a policyholder opts for a zero depreciation add-on, this liability gets shifted to the insurer. Thus, when a zero depreciation cover has opted with a comprehensive car insurance policy, the insurance provider indemnifies the policyholder for the depreciation expenses of the car and its replaced parts.

Depreciation Rates With and Without Zero Depreciation Cover

Age of Car

Rate of Depreciation Without Zero Depreciation

Rate of Depreciation Without Zero Depreciation

Under 6 months



6 months to 1 year



1-2 years



2-3 years



3-4 years



4-5 years



5-10 years



Above 10 years



Part of Car

Rate of Depreciation Without Zero Depreciation

Rate of Depreciation Without Zero Depreciation

Paint work /Rubber/nylon/ plastic parts, tires and tubes, batteries and airbags parts



Fibre glass parts



Glass parts



Zero depreciation v/s Comprehensive car insurance policy

Basis of differentiation

Comprehensive policy (With zero depreciation add-on)

Comprehensive policy (Without zero depreciation add-on)


Comprehensive policies with zero-depreciation comparatively cost more than a standard policy without the zero depreciation cover.

A standard comprehensive policy without zero depreciation add-on cover comes for a lesser premium as compared to policies with zero depreciation.

Claim settlement

Higher claim amounts because the cost of depreciation is not deducted or factored.

Lower claim amounts as cost of depreciation gets deducted from the entitled claim amount.

Age of the vehicle

This add-on is only available for cars less than 5 years of age.

Available for cars of all ages.

Comparison of Comprehensive Cover With and Without Zero Depreciation Cover


Comprehensive Cover + Zero Depreciation Cover

Comprehensive Cover Only


Marginally higher

Lower than a policy with a zero depreciation cover

Compensation Amount

Higher compensation on filing claim as depreciation is not accounted for

Lower compensation on making claims as the depreciation rates lower the IDV over time

Plastic Parts

No depreciation considered during the repair.

50% depreciation considered when paying compensation for its repair.

Age of Car

Not affected as the depreciation rate is not accounted for with the depreciation cover.

The rate of depreciation keeps increasing making the claim amount lower with time.

Should I Buy A Zero Depreciation Cover?

Purchase of a zero depreciation add-on cover is a beneficial investment. It not only shifts the liability of the cost of depreciation from the insurer to the insured but also results in higher claim amounts at the time of settlement.

Also, the cost of depreciation that a policyholder bears for the replaced parts of his/her car at the time of car claim settlement is generally higher than the premium which a policyholder pays for a zero depreciation add-on. Thus, buying a zero depreciation cover is highly recommended.

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