What is Zero Depreciation in Car Insurance?

When most people think of vehicle insurance, they assume it’s a standard product - cover for accidents, theft, or third-party liability. But what really makes a difference are the add-ons you can choose. 

One of the most important and misunderstood add-ons is Zero Depreciation Cover.

The Problem with Regular Insurance

The moment you drive your brand-new car out of the showroom, it loses value - around 5% instantly. 

Each passing year, your vehicle depreciates further (10–15% annually, eventually up to 50%).

This depreciation is important because, during a claim, insurers calculate your payout after deducting depreciation.

Metal parts: 5% deduction in the first year, 15% in the second, 25% in the third, and so on.

Plastic, glass, and fibre parts: Straight 50% deduction from day one.

For example, if your car meets with an accident and repairs cost ₹1 lakh (mostly fibre and glass parts), the insurer may pay only ₹50,000. The rest comes out of your pocket.

How Zero Depreciation Helps

With a Zero Depreciation add-on, this deduction doesn’t apply. 

The insurer settles the claim based on the full cost of repairs or replacement, not the depreciated value.

So, in the same ₹1 lakh repair example, instead of receiving ₹50,000, your policy with Zero Depreciation ensures you get the entire ₹1 lakh (minus the standard deductible or any minor consumables).

Why It Matters

Higher payout: You avoid paying hefty amounts for parts replacement.

Peace of mind: Accidents already cause stress — Zero Dep makes the financial part easier.

Best for new cars: Especially valuable in the first 5 years when depreciation is steep.

The Bigger Picture

Zero Depreciation is just one add-on. 

Others like engine protection, tyre protection, or return-to-invoice cover also enhance your policy. But if you had to pick only one, Zero Depreciation often offers the best value for money.

At Karyam Finserv, we help you understand these options so you’re never caught by surprise at claim time. 

Visit: www.karyamfinserv.com for more information.