Depreciation is the reduction in the value of your assets as they get older. The value of all the materials like plastic, metal or glass that are used in the construction of your car is scaled down over time.
You may choose zero depreciation car insurance as an add-on while purchasing your car insurance plan. The value of your car gets reduced over a period of time. If you have the zero depreciation car insurance cover you do not need to be anxious about the effect of depreciation while claiming the insurance.
If your car is lost or damaged severely due to some accident, you may claim the insurance from the company. But the entire value of your car will not be repaid by the insurance company as over time the value of your car will be reduced and the company will consider the depreciation factor while settling the claim.
However, if you have the zero depreciation cover, the depreciation factor will not be applicable. The insurance company will pay the complete coverage amount and the effect of depreciation will not come into play. To purchase the cover with your insurance plan, you will be required to pay an extra amount of money. But it will prove to be immensely helpful if your car meets with an accident and gets completely damaged in the process or if it lost due to theft. If you have the cover, the insurer will not be able to deduct the depreciation amount on your car batteries, tyres or any other parts. They are liable to pay the amount for the replacement of the complete body of your car.
There are, however, certain circumstances which are not included within the zero depreciation car insurance cover. If the engine of your car is damaged due to oil spill or water logging, the insurance cover will not be applicable. Also, if your car is damaged due to mechanical breakdown, change of oil or other exhaustible portion, the zero depreciation cover will not be helpful. Moreover, you will be eligible to only a certain number of claims during the tenure of your policy and anything over that will be excluded from the policy.
To purchase the Zero Depreciation Cover, the policy holder will be necessitated to pay an extra amount. This required amount normally does not exceed 15-20 per cent of the original premium charges. Moreover, if your car is more than five years old, you will not be able to utilize the cover.
In the present time when road accidents occur so frequently, it is a wise decision to opt for the zero depreciation cover as there are countless benefits. The zero depreciation policy can be acquired under certain instructions. They are as follows:
- The car should be less than five years old.
- If you own a luxury car, purchasing the cover is a must
- As a policyholder, you are not adequately experienced with driving
- The policyholder has to drive in areas that are prone to accident
- If the policyholder owns a car with expensive spare parts
There is a popular idea among people that zero depreciation cover is only applicable to drivers who are not much experienced. This is not so. Even experienced drivers can avail the benefits from this insurance cover which may relieve them from the financial burden in case the car meets with an accident.