When buying a new car, you have to choose between a comprehensive and zero depreciation insurance plan for the vehicle. Many individuals assume that there isn’t much different between these two types of cover and opt for the former simply because it is more affordable. However, zero dep cover is quite different from a standard comprehensive policy and offers added benefits too. This article will highlight some points of difference to help you make an informed selection between the two.
1. Compensation in case of a claim:
Let’s assume that you meet with an accident and need to replace certain parts of your car. In this case, both comprehensive and zero-depreciation insurance will cover the repairs. However, comprehensive car insurance will provide the replacement costs minus the applicable amount of depreciation. On the other hand, zero-depreciation insurance will offer 100% cover for part replacement.
Considering that depreciation on car parts would range from 5% to 50% on metallic parts (depending on the age of the car). Further, nylon, plastic and rubber parts have a flat 50% depreciation and fiberglass parts have a straight 30% depreciation. Therefore, with a standard comprehensive car insurance policy, you might have to cover the gap between the depreciated value of the parts and their actual replacement cost.
Another big difference between a standard comprehensive plan and zero-depreciation car insurance is the cost. This is because zero depreciation cover is an add-on that needs to be purchased with a standard plan, thereby increasing the cost. Zero-depreciation insurance can be as much as 15 to 20 percent more expensive than a normal plan, depending on the age of the car and a couple of other factors.
3. Eligibility age of the car:
Zero depreciation car insurance is usually reserved for newer cars. Most insurance companies will only offer this cover for cars that are less than 5 years old. Some of the better insurers will push the eligibility to 7 and 10 years at the most. However, there is usually no such eligibility age on comprehensive plans – you should be able to buy a plan no matter how old your car is!
- Number of claims.
This is another huge difference between zero dep car insurance and comprehensive insurance.With a normal comprehensive plan, you should be able to make as many claims as you want in a year. However, with a zero-depreciation policy, there might a limit on a the number of claims you make in a year. But again, many of the better lenders will not have such a restriction. Therefore, you need to cross-check this aspect before you a plan!
As you can see, there are a number of differences between comprehensive and zero-depreciation car insurance. However, the most important is level of compensation offered by these plans. If you wish to keep your out of pocket expenses to a minimum, it is best you opt for zero-dep insurance rather than a standard policy.
We hope this has been helpful, good luck and all the best!