What is Zero Depreciation Cover?

The basic car insurance cover offers basic coverage at the minimum premium value. And to get extra protection for the vehicle, car owners buy add-ons on the basic car insurance policy. The basic car insurance policy at many insurance providers in the UAE includes theft, fire, and accident coverage. Other damages need to be covered by the car owner or the vehicle owners can get add-ons on the basic insurance policy. There are several add-ons provided on a basic car insurance policy and it depends on each vehicle owner to decide which is necessary for their vehicle. 

Out of several car insurance add-ons, Zero depreciation cover is an important add-on that works on the value of the vehicle, unlike other add-ons which depend on other factors like location, weather conditions, etc.  

Zero Depreciation Cover - Meaning

Similar to any commodity, a car also depreciates its value with time. The general wear and tear of the vehicle tends to depreciate its value and new models in the market also add to this. And when the car owner claims insurance coverage during an accident, then the value of the vehicle depreciates even more. This eventually increases the premium value of the insurance. Here’s where the zero depreciation cover comes to the rescue.  

With the zero depreciation cover on car insurance, the car value remains the same even after claiming the coverage. For example, if a vehicle meets with an accident while getting the parts replaced, the insurer will only pay for the new parts after subtracting the depreciation value of the part and the rest of the bill amount should be paid by the insurance holder. If there is a zero depreciation add-on, then the insurance provider will not consider the depreciation and provide reimbursement for the entire cost of the part. In simple terms, having a zero depreciation add-on will help you in getting the higher claim amount when required. 

The zero depreciation cover is also called bumper-to-bumper car insurance or nil depreciation.  

Benefits of Zero Depreciation Cover

The key benefits of having zero depreciation add-on on your basic car insurance in the UAE is as follows, 

• Higher claim amount - While claiming your policy, the difference between the claim amount and the damage repair bill will be less with the zero depreciation add-on
• Saves money - You can save money as the add-on will help in reimbursing a high amount 
• The depreciation value of the parts and the vehicle is not considered  

Should everyone get Zero Depreciation Add-on?

Though the zero-depreciation add-on adds good benefits to your car insurance policy, there are certain points you should note before getting the add-on which would increase the premium value a bit on the basic comprehensive car insurance policy in the UAE. 

• Usually, it is provided only for new vehicles or vehicles less than 5 years old. Very few insurance providers offer zero depreciation add-on for vehicles more than 5 years old. 
• The zero depreciation add-on will not be applicable if you are driving without a license at the time of the accident or driving under the influence of substances at the time of the accident. 
• The add-on will increase your policy premium value but the repair costs during the claim can be higher than the premium value you’ll be paying. 
• People with a new car, luxury cars, if living in accident-prone areas, new/inexperienced drivers, if your vehicle has expensive parts. 
• It is not provided on third-party car insurance. Only comprehensive car insurance buyers can get it.