Definition
Zero Depreciation Cover
Zero depreciation (also bumper-to-bumper) is a motor add-on that waives depreciation on replaced parts, so the insurer pays the full cost of new parts in an own-damage claim.
In a standard own-damage claim, the insurer deducts depreciation on plastic, rubber and metal parts, leaving the owner to bear that share. A zero-dep add-on removes most of these deductions, maximising the claim payout, which is especially valuable for new and premium cars.
The add-on raises the OD premium and is usually available only for vehicles up to a certain age (commonly the first few years). Insurers may cap the number of zero-dep claims per year. It is the single most recommended add-on for new car buyers in India.
Related terms
- Own-Damage CoverOwn-damage (OD) cover compensates for damage to or loss of the insured's own vehicle from accidents, theft, fire and natural calamities.
- Insured Declared Value (IDV)Insured Declared Value is the current market value of a vehicle fixed at policy inception, representing the maximum the insurer will pay on theft or total loss.
- Add-On CoverAn add-on (or rider) cover is an optional enhancement bought with a base policy to widen protection for an extra premium.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.