Myths about Zero-Depreciation as Add-on Coverage
Depreciation refers to an asset’s loss in value over time due to factors such as time, wear and tear, and obsolescence. Buying a brand-new car will cost more than buying an older model. As with all the materials that are incorporated into building a car, including glass, plastic, metal, etc., there is a certain depreciation associated with them. Material depreciation rates are different for each material or part. A motor or auto insurance policy that provides zero depreciation allows you to protect your car from all physical damage caused to it without taking into account depreciation. In spite of the fact that a standard motor insurance policy covers you against losses arising from damage or theft to your vehicle, you receive compensation after depreciation has been deducted.
Acquiring Zero Depreciation coverage is a prudent move. It is imperative, however, to understand exactly what it offers. Depreciation is the process of losing value over time due to wear and tear on automobiles. The rate at which depreciation occurs is referred to as the depreciation rate. In the next three years, the value of your car will decrease 20% at current rates and then rise 10%. A vehicle’s purchase price and insurance cost are affected by this rate. Insured Declared Value(IDV) is used to determine car insurance claim restrictions, which are affected by the insurance rate. You may be able to avoid having your IDV influenced by the depreciation rate by purchasing Zero Depreciation vehicle insurance. Before you buy this cover, read this article to find out what the common misconceptions are.
Consider the following factors when deciding whether or not to purchase an auto insurance policy with zero depreciation cover:
- As a result of not taking into account the car’s depreciation rate at the time of the claim, the zero-depreciation cover provides higher claim amounts for your vehicle. Although this insurance isn’t cheap, in case of an unforeseen event you will be able to save a lot of money. Generally, vehicles under the age of five are eligible for this coverage but there are exceptions to this rule. More information about the depreciation rate of an automobile can be found here.
- During an automobile repair, a garage typically uses a wide range of consumable supplies including nuts and bolts, oil, etc. Car insurance policies do not cover the cost of such items unless you opt for a ‘consumables’ add-on cover. The Zero-Depreciation Plan does not cover these costs whatsoever.
- Deductibles and consumables are not covered by this plan. As a result, you’ll need to indicate if the policy’s component of the ‘compulsory deductible’ applies when filing a claim. The policyholder is responsible for a predetermined nominal amount when filing a claim which is called ‘File charges’. Furthermore, the insurance company pays 100% of the damage cost when there is no depreciation. Both glass and plastic damages are covered, but plastic and metal damages are only covered to a certain extent. Therefore, it is very crucial to be aware about this component beforehand to avoid the trouble.
- When you want to purchase a Zero Depreciation Add-on for a six-year-old car, you may encounter some difficulties. For vehicles older than five years, most insurers do not offer this additional coverage.
- Both cars and motorbikes can take advantage of the Zero-Depreciation add-on. Providing you choose this add-on protection along with your comprehensive plan, you will be able to purchase or renew your car insurance policy.
- In the same manner, like other vehicle insurance options, the Zero Depreciation Add-on is subject to exclusions. This coverage does not typically extend to the following features of a vehicle –
- Vehicles can be damaged by mechanical breakdowns.
- The wear and tear of equipment is impossible to avoid.
- The impact of an oil spill or water intrusion can be considerable.
- Items not covered by insurance, such as a gas canister or bi-fuel kit, are insolvent.
Let’s wrap up!
In general, you can submit an insurance claim that will not affect the Insured Declared Value of your vehicle if it has a zero-depreciation policy. Compared to other policies, it is more expensive; however, the benefits will be disproportionately favorable in the case of a calamity. Before purchasing this cover, make sure you know what it offers and what it does not offer. You can add ‘0% depreciation’ as an additional feature to your regular insurance policy; there are many other useful additional features for your car insurance. Join us to learn more about this policy and receive the latest beneficial offers.