Zero depreciation car insurance is the one add-on most car owners wish they’d bought before their first claim. Here’s a common scenario: you file a claim after a fender-bender. The repair bill is ₹50,000. Your insurer approves the claim but pays you ₹37,000. The remaining ₹13,000? That’s depreciation — and it comes out of your pocket.

This is the single biggest surprise for car owners when they make their first insurance claim. Your policy covers the damage, sure, but not the full cost of replacing parts. The older your car, the bigger this gap gets.

Zero depreciation cover exists to close that gap. Here’s how it actually works.

What is zero-depreciation car insurance?

Every car part loses value over time. A bumper that cost ₹10,000 when the car was new might be valued at ₹5,000 three years later — at least in the eyes of your insurer.

IRDAI (the Insurance Regulatory and Development Authority of India) sets standard depreciation rates that every insurance company follows. Here’s what those rates look like:
as per IRDAI guidelines

Depreciation rates by part type:

Part	Depreciation Rate
Rubber, nylon, plastic parts	50%
Fibre glass components	30%
Glass	Nil (0%)
Wooden parts	5%
Metal body	Depends on car age

Depreciation rates by car age:

Car Age	Depreciation on Metal Parts
Less than 6 months	5%
6 months to 1 year	10%
1 to 2 years	15%
2 to 3 years	20%
3 to 4 years	25%
4 to 5 years	30%

So when you file a claim, your insurer calculates the repair cost, deducts depreciation on each replaced part, and then pays you the reduced amount. The difference is yours to bear.

So what is zero depreciation cover?

Zero depreciation — also called nil dep, zero dep, or bumper-to-bumper cover — is an add-on you buy along with your comprehensive car insurance policy. It does one simple thing: removes the depreciation deduction at claim time.

With this add-on, your insurer pays the full replacement cost of damaged parts, regardless of your car’s age. You only pay the compulsory deductible (₹1,000 for cars under 1500cc, ₹2,000 for cars above).

It cannot be added to a third-party only policy. You need a comprehensive or standalone own-damage policy first.

A real example: with vs. without zero dep

Let’s say your 2-year-old car gets into an accident. The repair estimate from the garage is ₹50,000, broken down as:

Damaged Part	Repair Cost	Depreciation Applied	You Pay (Without Zero Dep)
Plastic bumper	₹10,000	50% = ₹5,000	₹5,000
Metal body panel	₹25,000	15% = ₹3,750	₹3,750
Rubber parts	₹5,000	50% = ₹2,500	₹2,500
Glass windshield	₹10,000	0% = ₹0	₹0
Total	₹50,000	₹11,250

Without zero dep: Insurer pays ₹50,000 – ₹11,250 – ₹1,000 (deductible) = ₹37,750. You pay ₹12,250 from your pocket.

With zero dep: Insurer pays ₹50,000 – ₹1,000 (deductible) = ₹49,000. You pay just ₹1,000.

That’s a difference of ₹11,250 on a single claim. The add-on itself might cost ₹1,500-3,000 per year depending on your car.

Who should buy zero depreciation cover?

Not everyone needs it. Here’s a honest breakdown:

It makes sense if you:

• Own a car less than 5 years old (most insurers won’t offer it beyond this)
• Drive a car with expensive plastic or rubber body parts (most modern cars)
• Are a new or nervous driver
• Live in an area with heavy traffic, poor roads, or frequent waterlogging
• Own a luxury or premium car where parts cost a lot
• Take long highway drives regularly

You can probably skip it if you:

• Have a car older than 5 years (it won’t be available anyway)
• Rarely drive and keep the car garaged most of the time
• Have a low-value car where parts are cheap
• Are comfortable covering depreciation costs out of pocket

What zero dep does NOT cover

This is where people get tripped up. Zero depreciation is not a magic shield. It still has limits:

• Tyres and batteries are only covered at 50% (you’ll need a separate Tyre Protect add-on for full coverage)
• Mechanical or electrical breakdown — not covered
• Normal wear and tear — not covered
• Total loss or theft — zero dep doesn’t apply here; IDV (Insured Declared Value) kicks in instead
• Driving under influence or without a valid licence — claim gets rejected entirely
• Claim limit — most insurers allow only 2 zero dep claims per policy year (some like IFFCO Tokio and New India Assurance offer unlimited claims)

How much does zero depreciation cost?

The premium depends on your car’s make, model, age, and city. But as a rough guide, zero dep adds about 15-20% to your comprehensive premium.

For a mid-range car like a Hyundai Creta or Maruti Brezza, expect to pay somewhere between ₹1,500 and ₹4,000 per year for the add-on. For a luxury car, it could go higher.

When you compare that to paying ₹10,000-15,000 out of pocket on a single claim, the math works out pretty clearly.

Zero dep vs. comprehensive vs. third party — quick comparison

Feature	Third Party Only	Comprehensive	Comprehensive + Zero Dep
Third party damage	Covered	Covered	Covered
Own car damage	Not covered	Covered (with depreciation)	Covered (no depreciation)
Theft	Not covered	Covered	Covered
Depreciation deducted	N/A	Yes	No
Premium	Lowest	Medium	Medium + add-on cost
Best for	Minimum legal compliance	Most car owners	New cars, expensive repairs

How to buy zero depreciation cover

You can add it at the time of purchasing or renewing your comprehensive car insurance. Every major insurer in India offers it — ICICI Lombard, HDFC ERGO, Bajaj Allianz, New India Assurance, and others.

If you’re buying through a broker like Aero Insurance, we’ll walk you through the options and help you compare quotes across insurers. The whole process takes about 10 minutes.

What you’ll need:

• Your car’s registration number
• Previous policy details (if renewing)
• Your contact information

Frequently Asked Questions

Is zero depreciation worth it for a new car?
Yes. New cars depreciate fast — 5% the moment you drive off the lot. And since modern cars use a lot of plastic and rubber parts (which depreciate at 50%), the zero dep add-on can save you thousands on even a minor claim.

Can I buy zero depreciation for an old car?
Most insurers limit it to cars under 5 years old. A few extend it to 7 years. After that, it’s generally not available.

Is zero dep the same as bumper-to-bumper insurance?
Yes. Zero depreciation, nil depreciation, zero dep, and bumper-to-bumper are all names for the same add-on cover.

How many claims can I make under zero dep? Typically 2 per policy year. Some insurers like IFFCO Tokio and New India Assurance allow unlimited claims under zero dep.

Does zero dep cover engine damage? No. You’ll need a separate Engine Protect add-on for that.

Can I add zero dep to a third-party policy? No. It can only be added to a comprehensive or standalone own-damage policy.

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Need help choosing the right add-ons for your car insurance? Talk to our team — we compare policies across 20+ insurers to find you the best deal.

Aero Insurance is a brand name of (Aero Broking and Consulting Services Pvt. Ltd., CIN: U66190UP2024PTC199615). We don’t sell our own policies — we help you find the right one.