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Difference between Comprehensive and Zero Depreciation Insurance

Difference Between Comprehensive and Zero Depreciation Insurance

​Insurance is mandatory for all vehicles in India, and various types of policies are available to cater to different needs and preferences. The comprehensive insurance plan offers the most well-rounded protection. 

The best part about such plans is that you can also opt for a few add-on covers to make the policy robust and the coverage overarching. One such add-on is zero depreciation or nil depreciation cover. 

However, you may wonder if you should buy a standard comprehensive plan or add a zero depreciation cover to it for an increased cost.

In this article, we will understand the finer details of zero depreciation vs comprehensive insurance, highlighting their pros and cons to provide a comparison between the two.

What is Comprehensive Insurance?

Comprehensive insurance is a type of vehicle insurance that offers extensive coverage for your vehicle. It includes coverage for damages incurred due to accidents, theft, fire, explosions and natural calamities. 

Comprehensive insurance also includes third-party liability coverage, which protects you from financial losses and legal liabilities in case of accidents involving other vehicles or pedestrians. 

This type of insurance offers a wide range of benefits and coverage for different types of risks and damages. 

The policy can also be customised with various add-ons, such as nil or zero depreciation, No Claim Bonus (NCB)  protection and engine protection, to enhance the coverage further.

What is Zero Depreciation Insurance?

Are you wondering - what is zero depreciation in car insurance? Let us find out.

When filing a claim for damages or theft under a standard insurance policy, the insurance company applies depreciation to the Insured Declared Value (IDV) of the vehicle based on its age and usage. 

With the Nil or Zero Depreciation add-on, the insurance company waives the depreciation component for specific parts or the entire vehicle, depending on the policy terms.

Zero Depreciation or Nil Depreciation insurance is an add-on coverage that can be purchased with comprehensive insurance. This coverage removes the depreciation factor while settling claims, ensuring that the policyholder receives the total cost of repairs without any deductions for depreciation. 

Nil depreciation insurance cannot be purchased as a solo policy as it is an add-on available with only comprehensive insurance. Therefore, in order to get the benefits of Nil or Zero Depreciation coverage, one needs to have an existing comprehensive insurance policy.

Difference Between Comprehensive and Zero Depreciation Insurance

Here is a comparison of a comprehensive insurance policy with Zero or Nil Depreciation cover and a comprehensive insurance policy without zero depreciation cover:

Features

Comprehensive Insurance with Zero Depreciation Cover

Comprehensive Insurance without Zero Depreciation Cover

Coverage

Extensive coverage for damages caused by accidents, theft, natural calamities, etc., with no depreciation considered.

Extensive coverage for damages caused by accidents, theft, natural calamities, etc. 

Premium

Higher premium compared to comprehensive insurance without zero depreciation add-on

Lower premium compared to comprehensive insurance without zero depreciation add-on

Claim Settlement

No depreciation is considered while settling claims.

Depreciation is considered while settling claims.

Cost of Repair

No depreciation is considered for spare parts

Depreciation is considered for spare parts


Pros and Cons of Comprehensive Insurance

Pros of Comprehensive Insurance:

  • Extensive Own Damage Coverage:

    Comprehensive insurance offers extensive coverage for your vehicle, including damages caused by accidents, theft, fire, explosion and natural calamities.
  • Third-party Liability Coverage:

    Comprehensive insurance includes third-party liability coverage, which protects you from heavy financial burdens and legal liabilities in case of accidents involving third parties or other vehicles.
  • Compliance with Legal Requirements:

    In India, holding at least a basic third-party liability insurance is mandated by law. Comprehensive insurance fulfils this legal obligation while providing additional coverage.
  • Customisable:

    Comprehensive insurance can be customised with various add-ons to enhance the coverage.

Cons of Comprehensive Insurance:

Comprehensive insurance plans offer all-around protection to the vehicle. However, there are certain aspects that you need to keep in mind while buying one: 

  • Higher premium:

    Comprehensive insurance typically has a higher premium when compared to other types of insurance.
  • Depreciation Factor:

    One of the primary drawbacks of comprehensive insurance is the application of deprecation to the insured vehicle’s value. As vehicles age, their insured value diminishes, leading to lower claim settlement in the event of total loss or significant damage. Here, however, you can opt for a Nil Depreciation add-on cover.
  • Exclusions :

    Comprehensive insurance policies may exclude certain risks or scenarios from coverage, such as damages caused by normal wear and tear, mechanical breakdowns or negligence on the part of the insured.

Pros and Cons of Nil Depreciation Insurance

Pros of Zero/Nil Depreciation Cover: 

The following are the pros of having a Nil or Zero Depreciation cover:​

  • No Depreciation Deductions :

    The most significant advantage of the Nil Depreciation add-on is the elimination of depreciation deductions on the vehicle’s parts, ensuring that policyholders receive the total value of repairs or replacements.
  • Higher Claim Settlements :

    By avoiding depreciation, Nil Depreciation insurance policies result in higher claim settlements, making it easier to restore the vehicle to its pre-accident condition.
  • Enhanced Coverage :

    Nil Depreciation insurance provides enhanced coverage for your vehicles, especially for luxury cars with expensive parts.
  • Resale Value Protection:

    Nil Depreciation insurance can help preserve a vehicle’s resale value by maintaining its condition through complete repairs or replacements.

Cons of Zero/Nil Depreciation Cover:

These are the following cons of having a Zero or Nil Depreciation cover:

  • Limited Availability:

    Nil Depreciation cover is usually available only for the initial few years of the life of your car.
  • Higher Premium :

    Nil Depreciation cover typically has a higher premium compared to comprehensive insurance without any add-on.
  • Eligibility Criteria:

    Insurers may impose eligibility criteria for Nil Depreciation insurance, such as vehicle age limits or specific make and model restrictions.

Rate of Depreciation with and without Zero Dep Insurance

Car’s Age

With Zero Dep

Without Zero Dep

Up to 6 months

-

0%

Between 6 to 12 months

5%

0%

More than 1 year but less than 2 years

10%

0%

More than 2 years but less than 3 years

15%

0%

More than 3 years but less than 4 years

25%

0%

More than 4 years but less than 5 years

35%

0%

More than 5 years but less than 10 years

40%

0%

More than 10 years

50%

0%


Parts of the Car

With Zero Dep

Without Zero Dep

Glass parts

-

0%

Plastic parts/rubber/airbag parts/paintwork/nylon/ batteries

50%

0%

Fibre parts

30%

0%

Comprehensive Insurance vs Zero Depreciation Insurance: Which One is Better?

When deciding between comprehensive car insurance with or without zero depreciation coverage, evaluate based on the factors mentioned below - 

  • Vehicle’s age

  • Vehicle’s market value

  • Your budget

  • Policy terms and conditions 

  • Policy exclusions

  • Coverage limits 

For newer or high-value vehicles, the additional cost of a zero depreciation add-on may be worthwhile, as it can help preserve the vehicle’s condition and resale value. 

However, for older vehicles or those with a lower market value, the higher premium associated with Nil Depreciation insurance may not be the most cost-effective option.

Conclusion

After discussing car insurance with zero depreciation vs a comprehensive standard plan, you can make a more informed decision regarding your vehicle security. 

Standard comprehensive insurance and comprehensive car insurance with Nil Depreciation add-on are both popular options for car insurance in India. While Comprehensive Insurance is a policy type, Nil Depreciation is an add-on cover that you can opt for along with a Comprehensive plan.

Reliance General Insurance offers a wide range of car insurance plans with extensive coverage and various add-ons to ensure you can protect your vehicle and finances in times of unforeseen circumstances. With us, you can choose between a standard car insurance plan or a comprehensive plan with zero depreciation coverage.

Frequently Asked Questions 

  1. Which is better, comprehensive insurance with zero depreciation add-on or without zero-depreciation add-on?

The choice depends on your personal preferences. If you are looking for coverage that covers most things and do not want to pay extra money, then comprehensive insurance is for you.

If you have an expensive vehicle and are worried about its repair expenses over time, then having a zero depreciation or Nil Depreciation add-on along with your comprehensive insurance would make things convenient.

  1. What is the premium for comprehensive insurance with zero depreciation?

The premium for comprehensive insurance with zero depreciation is generally higher when compared to comprehensive insurance without the add-on. 

  1. Can I purchase zero depreciation insurance separately?

No, zero depreciation is not a separate insurance but an add-on cover which you can opt for along with a comprehensive insurance plan.

  1. Can I purchase comprehensive insurance without zero depreciation?

Yes, comprehensive insurance is available without the zero depreciation add-on. However, this option may not provide the same level of protection as a comprehensive insurance plan with zero depreciation add-on.

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