Sunday 11 October 2015

Everything About Zero Depreciation Car Insurance policy - For those who love peace of mind.

A zero depreciation plan provides policyholders with full claims without any depreciation deduction. This extended cover encompasses the repairing costs of glass, fiber, plastic, rubber parts and wind-shield etc. 

A traditional approach

It was 2009 when Zero depreciation policies entered Indian Markets. Before that it was common to buy a comprehensive insurance plan. One major shortcoming of the comprehensive vehicle insurance plan is it doesn’t cover all expenses more over you will get claim only on depreciated value of parts. Insured people have to shell out money for renovating fiber, rubber and plastic parts. Owners of old cars also have to spend a large amount of money as their old motor parts are replaced by new ones. In a major road-mishap, the expense of restoring these parts can rise over Rs 1 lakh. The owner of the car has to bear these costs even though he or she is armed with a so-called comprehensive cover. 

An Example

Mr. Ayush bought a brand new car and purchased a comprehensive insurance plan for his new car.  Unfortunately his car met an accidents and he incurred Rs.1.5 lacs on repairs of the car. He was surprised to receive only Rs. 1.2 lacs for damages from insurance company as compensation. This is because his insurance company deducted depreciation from the claim amount. This means Mr Ayush could have saved 30,000 rupees if he would have bought zero depreciation policy.

Practical Approach

Most of the Insurance companies offer Zero depreciation policy only for a first few years of the Vehicle which range from 3 to 5 years. Opting for Zero depreciation policy will cost you more than a comprehensive policy but if you are a peace lover them you must go for it. 

You may also like to read

No comments:

Post a Comment

New Tax Regime or Old – What should you choose?

The budget 2020 saw the finance minister Nirmala Sitraman announce a new tax regime with more tax slabs and lower tax rates. This was long...