Insurance360 | What Is Zero Depreciation In Auto Insurance

Описание: Insurance lingo can be tough! Still, you’ve got to try to understand it as it is essential. One crucial aspect of auto insurance vehicle owners aren’t very familiar with is Zero Depreciation or Nil Depreciation. What is this exactly? And how does it work? How can you benefit from this resource as a vehicle owner? Well, let’s find out!


In auto insurance, depreciation refers to the process through which your vehicle or specific parts lose value over a set duration of time. This loss of value often occurs as a result of the influence of variables such as:

Wear and tear,
Age, and
Obsolescence

A classic instance is a fact that brand-new cars are always more expensive than older vehicles. One thing you should note is the fact that different parts of a car are influenced by different depreciation rates. For example, the rate of depreciation applied to the metal parts of a vehicle is different from that applied to the glass parts of the same car.

Zero depreciation is vital in vehicle insurance because should your vehicle sustain major damage due to an accident, regular insurance will only pay out after the value of depreciation has been removed from the automobile repair costs. In essence, when you take on zero depreciation insurance cover, should your vehicle ever suffer damage, you are given the full value of the costs of any parts that need repairs. Some major differences you’ll observe between zero depreciation insurance and your regular insurance are;

You get a full settlement with zero depreciation while traditional insurance pays out after standard depreciation rates have been deducted.
What you pay as a premium for zero depreciation is significantly higher than what you pay for regular insurance premiums.
With regular insurance, you’d have to bear the costs of repairs relating to fiber, glass, and rubber parts of your vehicle out-of-pocket. The insurer covers those expenses when you’re on zero depreciation insurance.
*Only cars below the age of 3 are eligible for zero depreciation, while that is not the case with regular insurance.

Considering these factors, what comes next is determining whether zero depreciation insurance is for you. While you are free to put in for this insurance provided your car is not above the 3 years old, zero depreciation works best for you if you fall under any of these categories:

Your car is still brand new,
You drive a classic or exotic car,
You’re not a very experienced driver yet,
Your area experiences a high frequency of accidents,
Your car has very pricey spare parts, and
You don’t like dings and dents on your vehicle at all.



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