Motor Insurance · 7 min read
Zero Depreciation Motor Insurance: Is the Add-On Worth It for Your Car?
By Inderpreet Singh, QPFP · POSP-licensed Insurance Distributor · May 2026 · 7 min read
Most car owners discover what depreciation means in a motor insurance claim only after they file one. The bill is Rs 45,000. The insurer pays Rs 22,000. The balance is yours. This is depreciation in action — and zero depreciation cover is the add-on that eliminates it.
How Depreciation Reduces Your Claim Payout
When your car is repaired after an accident, the insurer pays for the parts replaced — minus depreciation. Depreciation is applied per the IRDAI schedule based on the part type and car age. The result is that for many common accident repairs, you recover only 50 to 70% of the actual repair cost.
The harshest depreciation hits plastic and rubber parts — which happen to be the most commonly replaced parts in accidents. Bumpers, dashboards, wiper mechanisms, headlamp housings — all depreciated at 50% regardless of car age.
| Part Type | Under 1 yr | 1 to 2 yrs | 2 to 3 yrs | Examples |
|---|---|---|---|---|
| Plastic, rubber, nylon, tyres | 50% | 50% | 50% | Bumpers, dashboards, wiper blades |
| Fibre glass components | 30% | 30% | 30% | Body kits, panels on some cars |
| Metal parts | 0% | 10% | 15% | Doors, bonnet, boot lid |
| Glass | 0% | 0% | 0% | Windscreen, side windows |
| Battery, airbags | 50% | 50% | 50% | High depreciation parts |
A Real Claim Example: With vs Without Zero Dep
A mid-segment sedan rear-ended in a parking lot. Repair bill: Rs 1,15,000. Here is what the insurer pays with and without zero depreciation:
| Item | Repair Cost | Without Zero Dep | With Zero Dep |
|---|---|---|---|
| Front bumper (plastic) replacement | Rs 18,000 | Rs 9,000 (50% dep deducted) | Rs 18,000 |
| Bonnet (metal) replacement — 3yr car | Rs 22,000 | Rs 18,700 (15% dep deducted) | Rs 22,000 |
| Headlamp assembly (plastic) | Rs 12,000 | Rs 6,000 (50% dep deducted) | Rs 12,000 |
| Side door (metal) — 3yr car | Rs 28,000 | Rs 23,800 (15% dep deducted) | Rs 28,000 |
| Dashboard (plastic) | Rs 35,000 | Rs 17,500 (50% dep deducted) | Rs 35,000 |
| Total | Rs 1,15,000 | Rs 75,000 (insurer pays) | Rs 1,15,000 (insurer pays) |
Out-of-pocket without zero dep: Rs 40,000. Zero dep add-on cost: Rs 3,000 to 5,000 per year. Payback in one claim.
When Zero Dep Is Worth It — And When It Is Not
Car under 5 years old
YesDepreciation schedules apply heavily for new cars on plastic and rubber parts which are replaced most frequently in accidents.
Car in accident-prone city (Delhi, Mumbai, Bengaluru)
YesHigher accident frequency means higher claim probability. More claims = more opportunities for zero dep to pay off.
Premium car with expensive parts
YesPlastic bumpers on a premium sedan can cost Rs 40,000 to 80,000. 50% depreciation means Rs 20,000 to 40,000 out of pocket without zero dep.
Car over 7 years old
NoMany insurers do not offer zero dep after 7 years. For older cars, the premium for zero dep may exceed the benefit — consider standard comprehensive instead.
Driver with clean record, low usage
OptionalIf you rarely claim and have a strong NCB, the marginal benefit of zero dep reduces. Consider NCB protection add-on instead.
Things to Know Before Buying Zero Dep
- Claim limit: Most zero dep policies limit the number of claims per year (typically 2). After the limit, standard depreciation applies.
- Age restriction: Most insurers restrict zero dep to cars under 5 to 7 years old. Check eligibility before purchasing.
- Compulsory excess still applies: Zero dep eliminates depreciation deduction but not the policy excess (typically Rs 1,000 to 2,000 per claim).
- Consumables not covered by default: Engine oil, nuts, bolts, and other consumables used during repair are not covered under zero dep unless you also add a consumables cover.
- NCB impact: Filing a claim to use zero dep cover resets your NCB. Evaluate whether the claim amount justifies losing the NCB discount before filing.
The Bottom Line
For any car under 5 years old in India, zero depreciation is one of the most straightforward insurance decisions — the premium is Rs 3,000 to 6,000 per year and a single claim on plastic parts pays it back entirely. It pairs naturally with comprehensive cover and is especially valuable in high-traffic metros.
Pair it with NCB protection so you can use it without losing your no-claim discount. For the full motor insurance picture, read our complete motor insurance guide.
If you want help reviewing your current motor policy structure, book a free consultation below.
Inderpreet Singh is a QPFP-certified financial planner, POSP-licensed insurance distributor, and AMFI-registered MF Distributor (ARN-357884) based in Gurgaon.
Insurance is the subject matter of solicitation. Depreciation schedules and claim examples are illustrative. Actual claim settlements depend on policy terms and insurer assessment. Verify current terms with your insurer before purchasing.