Zero Depreciation Cover: Is It Worth the Extra Premium?

Key takeaways

Zero depreciation waives the depreciation insurers deduct on replaced parts in a repair claim.
It is most valuable on new and nearly new vehicles with expensive plastic and electronic parts.
Policies usually limit the number of zero-dep claims a year and the vehicle age at which it can be bought.
It does not change IDV, deductibles or total-loss payouts.

Zero depreciation — sold as “zero dep”, “nil depreciation” or “bumper to bumper” — is the most popular motor insurance add-on in India. It is also often bought without anyone checking whether it pays for itself.

What it pays

In a normal repair claim, the insurer deducts 50% on plastic, rubber and nylon parts, 30% on fibreglass, an age-based rate on metal and part of the paint cost. Zero-dep waives those deductions. You still pay the compulsory deductible (and any voluntary deductible).

Part type	Depreciation on claim
Rubber, nylon and plastic parts, tyres, tubes, batteries, airbags	50%
Fibreglass components	30%
All glass parts	Nil
Painting — material part (25% of paint bill if not itemised)	50%
Labour	Nil

Metal parts — age of vehicle	Depreciation
Not exceeding 6 months	Nil
6 months – 1 year	5%
1 – 2 years	10%
2 – 3 years	15%
3 – 4 years	25%
4 – 5 years	35%
5 – 10 years	40%
Above 10 years	50%

A worked example

On a ₹29,500 repair bill for a 2–3-year-old car (₹12,000 plastic, ₹8,000 metal, ₹6,000 paint, ₹3,500 labour):

	Without zero-dep	With zero-dep
Depreciation deducted	₹7,950	₹0
Compulsory deductible	₹1,000	₹1,000
Insurer pays	₹20,550	₹28,500
You pay	₹8,950	₹1,000

If the add-on costs ₹2,500 a year, one claim like this pays for it three times over.

What zero-dep doesn’t cover

Consumables such as engine oil, coolant, nuts, bolts and clips (a separate add-on covers these).
Mechanical or electrical breakdown and normal wear and tear.
Tyres and tubes, except as allowed by the policy when the vehicle is damaged in the same accident.
Damage not covered by the base policy (for example, driving without a valid licence).

Limits to check

Number of claims: many policies allow a set number of zero-dep claims a year — often two.
Vehicle age: commonly available up to five years; some insurers allow older vehicles, often only if zero-dep was on the previous policy.
Inspection: buying zero-dep for the first time on an older vehicle may need an inspection.

Who should buy it

Usually worth it	Often not worth it
New or nearly new car or premium bike	Older vehicle with a low IDV
Heavy city driving, frequent minor scrapes	Rarely driven, parked securely
You would claim for moderate repairs	You’d pay small repairs yourself to protect NCB
Expensive plastic, lighting and sensor parts	Simple, cheap-to-repair vehicle

Zero-dep on a two-wheeler

On the scooter repair in our parts depreciation example — a ₹9,100 bill with mostly plastic parts — the owner pays ₹3,198 without zero-dep and only the ₹100 compulsory deductible with it. Because two-wheeler add-ons are inexpensive, one moderate claim can recover several years of the add-on’s cost.

Zero-dep and your No Claim Bonus

Zero-dep makes claims bigger, but it doesn’t change what a claim does to your NCB. For small repairs it can still be cheaper to pay yourself and keep the NCB. Before claiming, compare the payout with the NCB you would lose using the claim vs pay calculator.

Questions to ask before buying

How many zero-dep claims are allowed in the policy year?
Up to what vehicle age can I keep renewing it?
Does it apply to declared accessories?
Are tyres, batteries or airbags treated differently?
What exactly does it cost — can I see the quote with and without it?

Split a real garage estimate to see your saving.

Zero Dep Calculator

FAQs

Is zero-dep available for bikes?

Yes, many insurers offer it on two-wheelers, usually for vehicles up to a certain age.

Does zero-dep affect my NCB?

Zero-dep doesn’t protect NCB. A claim still resets it unless you also have NCB protection.

Can I add zero-dep in the middle of a policy year?

Add-ons are normally chosen at purchase or renewal. Check with your insurer whether mid-term endorsements are possible.

Sources

Parts depreciation rates in standard motor policy wordings; zero/nil depreciation add-on wordings filed by Indian insurers.