How many times can you claim zero amortization auto insurance?

Auto insurance has become a need of the hour today with the launch of new automobile models even in the electric vehicle space. Experts say it becomes crucial for a person to have car insurance in addition to owning and taking pride in a new vehicle, as a comprehensive policy protects car owners against repairs due to accidental damage or accidents.

If that is not enough, the Motor Vehicles Act 1988 requires all car owners in India to have valid car insurance for at least liability coverage only.

Parag Ved, President and Head of Consumer Lines, Tata AIG General Insurance, said: “With the advent of luxury and sports car sales, it is advisable to purchase insurance today. As an incentive to purchase auto insurance, no depreciation auto insurance is an add-on coverage that provides comprehensive coverage while negating the impact of depreciation on the car.

The car is a depreciating asset and this would certainly have an impact on the value of the insurance purchased. Depreciation is the devaluation of an asset due to factors such as natural wear and tear, use, and obsolescence.

The rate of depreciation for all vehicles has been prescribed in the Indian Motor Tariff and forms part of the terms and conditions of the policy as below;

Subject to deduction for depreciation at the rates mentioned below in respect of replaced parts
1. For all rubber/nylon/plastic parts, tires, tubes and batteries 50%
2. For fiberglass components 30%
3. For all glass parts NONE
4. The depreciation rate for all other parts, including wooden parts, will be according to the following schedule
vehicle age % damping
Not exceeding 6 months NONE
More than 6 months but not more than a year 5%
More than 1 year but not more than 2 years ten%
More than 2 years but not more than 3 years 15%
More than 3 years but not more than 4 years 25%
More than 4 years but not more than 5 years 35%
More than 5 years but not more than 10 years 40%
More than 10 years 50%
5. Depreciation rate for painting: In the case of painting, a depreciation rate of 50% will only be applied on the material cost of the total paint charges. In the case of a consolidated invoice for painting costs, the material component will be considered as 25% of the total painting costs for the application of depreciation.

How does he profit?

Zero Depreciation Cover is an additional cover that can be purchased with the Lump Sum Policy upon payment of an additional premium, this cover ensures that the insured receives the full amount on damaged or replaced parts of their motor vehicle in the event of accidental damage. which is generally amortized according to the terms and conditions of the policy. Ved points out: “With zero depreciation coverage on your side, the depreciation value of damaged parts will not be deducted from the amount of the claim.”

For example, some additional depreciation reimbursement covers apply to vehicles up to 05 years old. For personal cars, it is also extended up to 7 years provided there is NCB in the policy. The standard offer is the first 2 claims during the policy period, however, policyholders have the option of choosing 3, 4 or an unlimited number of claims upon payment of an additional premium.

Ved explains, “Coverage without depreciation is best suited for car owners who want to use their insurance sensibly and not waste money on the depreciation of car parts. Zero amortization cover applies to vehicles less than 5 years old and the insured can benefit from it twice during the term of the policy.

It further adds, “This add-on coverage can be best utilized by new car buyers, sports car buyers, luxury car owners, and car owners in accident-prone areas.”

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