When buying car insurance, whether comprehensive, third-party, or own damage car insurance, one of the popular covers that often catches the attention of many car insurance buyers is zero depreciation. Zero dep car insurance is the insurance coverage that does not deduct your vehicle’s depreciation amount while calculating the claim.
But when it comes to buying four-wheeler insurance for a 7-year-old car, should one buy this cover or not? Let us find out the answer to this question in this article.
What is Zero Depreciation Insurance Cover?
Zero depreciation, also known as ‘‘bumper-to-bumper insurance’, is an add-on cover that helps you to get the complete value of repairing or replacing the vehicle parts without considering their depreciation value.
Typically, the insurance policy without zero depreciation coverage calculates the depreciation of your vehicle and then deducts it while settling the claim. Due to this, policyholders have to bear a certain amount of the repair or replacement cost from their pockets.
However, zero dep insurance covers from reliable companies like Tata AIG can save you from this, which becomes highly beneficial when repairing and replacing the parts of expensive vehicles.
Pros of Zero Depreciation Cover
1. Higher Payouts
One of the benefits that zero depreciation insurance coverage provides is the assurance that you will receive higher payouts if any part of your vehicle is damaged.
In the case of the 7-year-old car, the value of accumulated depreciation is high. It means if you file any claim for the repair or replacement of a part, it may be less than the highest claim value on this car. As a result, you may have to pay the amount from your pocket. However, with this cover, you can avoid bearing the repair or replacement cost and easily claim its value from the insurance company.
2. Peace of Mind
A 7-year-old car frequently requires repair and maintenance, and its cost may cause worries to car owners.
But, with a zero depreciation cover, you can enjoy peace of mind knowing that you will not have to bear its cost out of your pocket in case of any covered wear and tear and accident.
3. Savings in the Long Run
Undoubtedly, purchasing a zero depreciation coverage will increase your premium amount, but in the long term, you will save money.
As the 7-year-old car requires more maintenance, it will cost you significantly. However, having zero depreciation cover will help you save money on repairing and replacing damaged parts of your old car.
Cons of Zero Depreciation Cover
1. Higher Premiums
Everything comes with the cost. Therefore, when you opt for zero depreciation coverage, you have to pay a higher premium than the standard insurance policy.
When buying this cover for a 7-year-old car, the premium might be even higher as the old car is more from wear and tear and requires regular maintenance. It will lead to frequent claims, resulting in higher premiums. Thus, investing in the zero depreciation cover may lead to a higher premium cost.
2. Age and Eligibility
When buying zero-depreciation car insurance, you must also check its terms and conditions. Many insurance providers impose age restrictions on vehicles, which may vary among various insurance companies. Thus, there might be a chance that your 7-year-old car is not eligible for this cover.
3. Claim Limits
Zero depreciation covers often come with certain claim limits. This can be a limit on the number of claims a policyholder can make during a policy term or the maximum amount you can claim each time. Therefore, it becomes essential to understand these coverage limits and check whether they meet the needs of your 7-year-old car.
Making the Decision: Should You Buy Zero Depreciation Car Insurance For Old Cars
Deciding whether to buy a zero depreciation cover for a 7-year-old car requires a balanced approach. Here are some factors to consider:
|Car’s Value||Assess the current market value of your car.||If repair costs exceed the car’s value, consider zero depreciation cover.|
|Usage and Risk||Evaluate how often you use the car and the driving conditions.||Higher usage or accident-prone areas may warrant coverage.|
|Financial Situation||Evaluate your financial ability to pay higher premiums.||Weigh potential savings against immediate costs if premiums are high.|
|Manufacturer and Model||Research your car’s make and model.||Certain models with higher spare part costs could benefit from zero depreciation cover.|
Buying a zero depreciation cover for a 7-year-old car depends on various factors and car owner priorities, as it comes with benefits and limitations. So, evaluating the pros and cons and other factors such as a car’s value, usage, and more is always advisable. Then, reach a decision that protects your car while maintaining your financial savings.