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If you are buying a new car or a car that is two-three years old, then you are advised to take zero depreciation car insurance.
What is zero depreciation car insurance? And how is it beneficial for you? And for whom is it more important? We have given all this information in this article.What is Zero Depreciation Car Insurance 2022
What is Zero Depreciation Car Insurance?
Zero depreciation insurance helps you get a full insurance claim (without depreciation deduction) for any damage to your vehicle.
It also gives you additional protection from the main insurance cover and for this, you have to pay an extra premium.
The insurance company deducts a certain percentage from the claim received without 'zero depreciation insurance. That is, the insurance company does not pay the full amount for the new parts.
How does Zero Depreciation Insurance Work?
To understand the working system of zero-depreciation car insurance, first, we have to understand the meaning of the word depreciation and its role in vehicle insurance.
Depreciation in Hindi means (depreciation) i.e. price decrease. As your vehicle gets older, it tends to wear out (in quality and capacity).
And its market price also decreases. This is called depreciation. Due to this depreciation, the Insured Declared Value of the car keeps on reducing.
Like the vehicle's overall condition, the valuation of its equipment also goes down continuously. This is the reason why the amount received instead of their insurance claim also decreases.
When the depreciation is applied, you do not get the full cost of the parts of your vehicle that have been replaced.
The insurance company pays only after deducting the depreciation amount from it. The remaining part has to be paid for by the car owner himself.
Zero depreciation add-on cover protects you from this loss. This means that instead of the damage caused to your vehicle, the claim is fully received; there is no deduction.
However, instead, you have to pay a little more than the normal premium on your insurance policy. One more thing, you can get zero depreciation insurance protection only on a new car or at most a 3-year-old-year-old car.
Example of benefits of Zero Depreciation Insurance
For example, you bought a car worth 10 lakhs in January 2018. You have also got general insurance 'Comprehensive Insurance'. A year later, your car collides with another car. It costs you 60 thousand rupees to get it repaired.
You sent your claim to the insurance company to compensate for this loss. In lieu of your claim, the insurance company gave only 48 thousand rupees and the remaining 12 thousand rupees were spent on your share.
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Now even if you had taken zero depreciation insurance, then the 12 thousand rupees you have paid would not have to be paid. Rather, the insurance company would pay for it itself.
In this way, the entire 60 thousand rupees would have gone to the insurance company.
Who needs Zero Depreciation Insurance Cover?
Zero Depreciation Insurance Protection is an add-on insurance cover. You get it linked separately with your main policy.
It is not mandatory for anyone to buy it. But, there are some special situations in which it is very useful/beneficial for you to take Zero Depreciation Cover-
Generally, people have the impression that taking a zero depreciation policy is suitable only for those people who are new or inexperienced in driving.
Because there is a high risk of damage to the vehicle in their driving. But, this thinking is not entirely correct. But, if you walk on the road, then just being skilled in driving your vehicle is not enough.
There may be new or new experienced types of drivers in other vehicles on the road, due to which your vehicle may get damaged. And then accidents can happen to anyone, no matter how old or skilled a driver is.
How is the premium for a zero depreciation policy determined?
The premium of zero depreciation insurance gets clubbed with your main insurance premium. Premium is the amount that you pay to the insurance company for taking any insurance cover.
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It can be paid in a lump sum or even in installments. The insurance company decides the premium of zero depreciation insurance on the basis of the following facts.
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