Why Should You Invest in Zero Depreciation Add-on Cover for Honda Cars?

Posted on: Oct 7, 2024 | 3 mins | Written by: HDFC ERGO Team

Why Should You Invest in Zero Depreciation Add-on Cover for Honda Cars?

Maintaining a car insurance policy is crucial, not just to meet legal requirements but also to safeguard your personal safety. It serves as a protective shield in case of accidents involving your vehicle, including Honda cars.

What is meant by depreciation?

Depreciation is the technical term implying the value reduction of a real asset, in this case, the vehicle concerned, due to regular usage and natural wear and tear.

If you face an accident and raise a claim, your insurer will settle the dues after deducting the depreciation value, based on the age, make, and model of the vehicle. The compensation you receive gets calculated on the depreciated value of the vehicle concerned and its components.

This implies that you need to bridge the gap between the actual replacement value and the depreciated value of the vehicle components.

What is meant by Zero Depreciation insurance?

Zero depreciation insurance is a special add-on coverage that you can add to your basic comprehensive insurance plan bought for your car to expand the coverage span.

If you possess this add-on, the insurer cannot deduct the depreciation value and you will receive full compensation in the case of any claim settlement, irrespective of the age of the vehicle, considering the terms and conditions of your chosen insurance policy.

Maintaining this rider ensures that you receive enhanced payouts, effectively reducing your out-of-pocket expenses in the case of any damage and claim settlement.

Rate of depreciation calculation in the case of vehicle

Who should opt for Zero Depreciation insurance cover?

Although, Zero dep insurance proves to be helpful for all cars, however, it is especially more helpful under the following circumstances:

1. If your registered vehicle resides in a recognized high-risk zone

2. If you are a learner driver or learnt to drive recently without much skill or expertise

3. If you have purchased a new vehicle, especially a luxurious high-end one

4. In case you seek to keep your beloved four-wheeler in a top-notch situation and opt to repair all sorts of minor damages, this add-on will guide you a long way

5. If you seek to reduce your OUP expenses, this rider is ideal for you

Advantages of Zero Dep Insurance

From the above discussion, it is clear by now, that Zero Dep insurance comes in handy under a lot of circumstances. Some of the significant benefits of having a Zero dep cover include:

1. Enhanced claim settlement amount:

As a Zero dep cover ideally bridges the gap between the actual damage cost and the claim settlement amount, it is implied that you will receive a comparatively larger amount from your insurer in the case of any claim settlement.

2. Shields financial loss:

This rider effectively raises the claim settlement amount, thereby, controlling financial drainage. Without this cover, your insurer will offer after deducting the depreciation value.

3. Affordable:

Since this is a rider, you have to purchase it along with your basic comprehensive insurance, by paying a little additional premium. However, it proves to be largely affordable when it comes to depreciation coverage. You can compare different competent plans to know what suits you the best and then grab the best deal.

4. Easy compensation claim:

Zero dep rider always ensures the exclusion of value deduction due to depreciation. In the case of any accident, you will receive full compensation.

How is the Zero Dep premium calculated?

The calculation of premium for Zero Dep insurance depends on several critical factors. Some of the most crucial factors considered in this respect include the following:

1. Geographical location:

Each and every residing area in the country, be it a city, town, or village, poses some advantages and disadvantages. Based on that the premium amount increases or decreases. Since the standard of living is comparatively higher in the case of urban locales, the premium amount tends to be higher.

2. Vehicle age:

Since the depreciation percentage changes with the age of the vehicle, therefore the vehicle age is a critical factor of consideration in this context.

3. Make and model of the vehicle:

The make and model of the vehicle alter its price. Therefore, if you have a standard vehicle, its price will be comparatively lower than a high-end model. This affects the premium payable amount too.

What is not covered under a Zero depreciation insurance plan?

Zero dep coverage insurance is not all-inclusive. There are certain specific exclusions in this case, that are followed by every insurance provider:

1. Invalid for vehicles older than 5 years:

When you are purchasing a Zero Dep cover, ensure that your vehicle’s age is within 5 years. It is best to buy it while buying insurance for your new car.

2. Total/constructive total loss of the vehicle:

Zero dep proves to be unfruitful in the case of total loss or constructive total loss of the vehicle concerned. The current market value and IDV are considered under such circumstances.

3. Replacement of certain components:

Zero dep insurance does not cover replacement costs of tubes and tyres, considering the terms and conditions of your chosen plan.

4. Driving without DL:

Any damages caused due to driving without proper and valid DL, are excluded.

5. Intoxicated driving:

Any damages caused due to intoxicated driving is not covered here.

6. Excludes consumables:

The cost of consumables like bolts, nuts, brake oil, gearbox, lubricants, screws, etc. are excluded.

7. Engine/mechanical breakdown:

Zero dep cover does not cover engine or mechanical breakdown.

8. Compulsory deductibles:

Zero dep cover does not allow coverage for compulsory deductibles during claim settlement.

How to purchase Zero Dep insurance?

Zero dep is no standalone cover; it is a rider, so you need to purchase it along with your basic comprehensive insurance policy. You can easily purchase car insurance online these days by following these few simple steps:

1. Choose your insurer after careful research and comparative study among several competent insurance providers

2. Visit the official website of your chosen insurance provider

3. Select “buy new insurance" option

4. Enter all the relevant details as required

5. Choose the necessary riders according to your requirement

6. Pay the premium using any trusted digital payment method like credit card, debit card, UPI, e-wallet, etc.

7. Once the payment is complete, you will shortly receive the policy papers to your registered email address.

Conclusion

We have aptly highlighted how Zero depreciation cover proves to be helpful, especially under certain typical circumstances. If you have purchased a Honda car, ensure to maintain a valid Honda insurance policy with Zero Dep cover for enhanced protection.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.

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