Enhanced (enhancement) cover or zero-depreciation cover is an add-on to a comprehensive vehicle insurance policy. It can help you financially secure your vehicle against accidental damages without factoring in depreciation.
With age, car parts lose their value due to wear and tear. As a result, insurers normally do not cover the entire cost of replacing damaged parts of your vehicle under the standard comprehensive insurance plan. To dismiss the impact of depreciation and get the entire value out of servicing your vehicle, you need to include the enhanced/zero-depreciation cover with your comprehensive vehicle insurance plan.
Inclusions and Exclusion of Zero-Depreciation Cover
Following are the aspects included in this add-on cover:
- Compensation for vehicle parts that attract wear and tear damages, including fibreglass, rubber, nylon, airbags, plastic parts, etc.
- Some insurers also help you cover a certain percentage of damages to your tyres and batteries without considering their depreciation.
Following are some of the aspects that this add-on cover does not include:
- Any perils that are not insured, including damages caused due to the mechanical breakdown
- Uninsured items of the vehicle, such as fuel kits, gas kits, etc.
Note: These inclusion/exclusion criteria are indicative. You should ideally visit the official website of your preferred insurance company to access the policy brochure of this add-on and read these in detail.
Benefits of Enhanced/Zero-Depreciation Cover
Following are some major benefits you can get by availing this zero-depreciation car insurance cover:
You can get a higher compensation by purchasing this add-on, as the insurer bears all the expenses of replacing the parts of your vehicle, disregarding depreciation.
Dodges Additional Expenses
The enhanced or zero depreciation car insurance cover can help you avoid paying any extra amount for replacing the parts damaged due to accident. This is because the insurer will not consider the depreciated value of those parts after you cover your vehicle with this add-on.
People Who Should Consider Buying Car Enhancement Cover
This enhancement or zero-depreciation cover will be immensely beneficial for the following group of individuals:
- Owners of a new vehicle
- People having an expensive luxury car
- Individuals with less or no experience in driving
- People having a car with expensive parts
Factors Impacting the Premium of Enhanced/ Zero-Depreciation Cover
Here are some aspects that significantly influence the cost of Zero-Depreciation Cover:
Maximum Sum Insured
Some insurers let their customers choose the maximum sum insured against different premium prices. You will have to pay more as a premium for this add-on cover if you select a higher sum insured value for your vehicle.
Location of Registration
You need to bear a higher price as a premium for this add-on if the place of registration of your vehicles is a metro city in India. In comparison, the premium price is lower for vehicles registered in a smaller city or town.
Type of Engine
The premium amount increases with the cubic capacity (cc) of your vehicle, and vice versa. Premium amounts are thus usually more in cars with higher displacement engines.
Accessories and Features
You may have to pay more if the vehicle is equipped with additional accessories. This is because the insurer appraises the premium price considering all the added accessories and features separately.
Things to Bear in Mind While Buying a Zero-Depreciation Cover
Following are some aspects you need to remember if you are opting to buy this insurance plan:
- You can purchase this add-on cover if the age of your vehicle is below 5 years.
- This cover will not help you evade the compulsory deductibles of the comprehensive vehicle insurance plan.
- The number of claims within a policy period is different across insurers. You should check it before purchasing the add-on cover.
- While purchasing the policy, you also need to read the inclusions and exclusions of this policy properly.
- You also need to ascertain that the insurer lets their customers conveniently file claims for the policy benefits.
- You should also try to ensure that your preferred insurer’s claim settlement ratio is higher than the market average.
How to Buy a Zero-Depreciation Cover
You can buy this add-on cover by undergoing the following step-by-step process:
Step 1: Visit the official website of your preferred insurance company
Step 2: Check and compare different plans for this add-on cover
Step 3: Generate a quote for buying this policy by clicking on ‘Check Plans’
Step 4: Mention whether you want this add-on cover for your two-wheeler or car
Step 5: Enter your vehicle’s number, mobile number and PIN code
Step 6: Click on ‘Get Quote’
After this, your insurer will get in touch with you to help you with your purchase.
To conclude, while researching a zero-depreciation cover, you may have stumbled on the add-on, enhancement or enhanced cover. They are basically different names of identical products extended by insurers. This add-on cover helps you beat the impact of the depreciation of your vehicle’s parts while claiming the policy benefits. You do not have to pay any additional amount to compensate for depreciation if the garage replaces any parts while servicing your vehicle after it meets with an accident.
Understanding so many car insurance terminologies could be perplexing, however, it is quite uncomplicated in comparison to learning crypto investment strategies. So, it is better to keep looking for various car insurance related information, for better knowledge of what type of insurance your car may need.