Everything You Need to Know About Zero Depreciation Car Insurance

Considering zero depreciation car insurance? Learn how this add-on works, what it covers, its benefits, limitations, claim process and why it may matter when choosing car insurance.

When a car is repaired after an own-damage claim, depreciation may be taken into account when certain parts are valued. As a result, the value considered for those parts may be lower than their original cost. This is one of the reasons depreciation becomes relevant when choosing additional protection for a car.

What Does Zero Depreciation Insurance Cover?

Zero depreciation insurance is an add-on that covers the applicable depreciation amount on certain parts during an eligible own-damage claim, subject to the policy terms, conditions, and exclusions. Under a standard policy, depreciation may be deducted from the value of parts that are repaired or replaced.

The add-on is therefore focused on one specific part of the claim calculation: depreciation. It does not replace your base car policy or change the other conditions that apply to a claim.

Why Is Zero Depreciation More Relevant for Newer Cars?

Depreciation generally increases as a vehicle and its components age. That makes the treatment of depreciation more relevant when newer cars need parts repaired or replaced under an eligible claim.

This is why zero depreciation cover is commonly associated with newer cars. The exact availability and eligibility, however, can vary depending on the insurer, vehicle age, and policy terms.

Does Zero Depreciation Cover Every Part?

The add-on does not necessarily apply in the same way to every component or every claim. Its scope depends on the policy wording, and there may be specific conditions, exclusions, deductibles, or claim limits.

Before choosing the add-on, look at details such as:

• Which parts are covered
• Whether any claim limit applies during the policy period
• Whether the vehicle has to meet a particular age or eligibility condition
• Which costs remain outside the add-on

Does Zero Depreciation Cost Extra?

A zero depreciation add-on comes at an additional premium over the base policy. The amount can vary depending on factors such as the vehicle, its age, and the policy being selected.

That additional premium is specifically for the depreciation-related protection provided by the add-on. It should therefore be considered separately from the cost and scope of the underlying car policy.

How Is Zero Depreciation Different From Other Add-Ons?

Zero depreciation deals with depreciation on applicable parts. Other add-ons address different areas of car ownership and repair.

For example, an engine protection add-on may deal with specified engine-related risks, while roadside assistance can provide services related to a breakdown or immobilisation. A consumables add-on may address items used during repairs. Each has its own scope, so one add-on should not be treated as a substitute for another.

Conclusion

A car loses value with age, but repair bills do not necessarily fall at the same pace. That is the gap zero depreciation cover is meant to address. For eligible parts, the add-on changes how depreciation is treated during an own-damage claim, which is why it is particularly relevant when the car is still relatively new.