Difference between Comprehensive and Zero Depreciation Insurance

Sanju, a 28 year old Area Sales Manager in an MNC company, bought his dream car after years of saving and hard work. He was very much happy with his car and was also very much concerned about its safety and maintenance. He also knew that buying a third party insurance is compulsory in India without which driving on the roads will be considered illegal. Therefor Sanju went to his friend’s house Altaf, who was already having a car insurance policy. After understanding the various benefits and importance of car insurance, Sanju got stuck when Altaf told him about the two options of car insurance, Zero-depreciation insurance and comprehensive insurance. He was not able to decide which one will be better for him and what are the various benefits offered in these insurance policies.

This is not only the case of Sanju. Many people in India get confused between comprehensive and zero depreciation insurance because they are not aware about the benefits of these two insurances and that’s why they fail in comparing these insurance products and are not able to choose the best one for them.

In this article, we will look at the major differences between comprehensive and zero depreciation insurance, so that you can choose the best one for yourself, according to your need and situation.

Comprehensive Insurance

A comprehensive insurance policy covers loss and damage to your own vehicle caused by certain events like fire, theft, vandalism, falling objects, etc. In addition to cover for your own vehicle, a comprehensive insurance policy comes with an inbuilt third party insurance protection.  This policy also comes with various add on options which allows you to widen the area of coverage by paying extra premium.

Zero Depreciation Insurance

The zero depreciation cover is an add on which doesn’t consider depreciation on cars. The zero depreciation cover is also known as bumper to bumper cover. This cover protects the owner of the car from the depreciation factor due to normal wear and tear which affects the settlement value in case of a claim. It was introduced in India in the year 2009 and since then it has become very popular and useful among buyers.

Basis Differences of Comprehensive and Zero Depreciation Policy

Premium Amount

The premium amount of comprehensive insurance is generally lower than zero depreciation insurance.

Claim Settlement

The zero depreciation, insurance offers settlement coverage without considering the rate of depreciation while in comprehensive insurance policy, the claim amount is given on the current value of the vehicle which includes the rate of depreciation.

of Repairing and Plastic Parts

In case of zero depreciation cover the insurance company covers the maximum cost of repairing and plastic parts while in comprehensive insurance, the policyholder has to pay more from his own pocket.

Age of the Car Covered

The zero depreciation insurance gives cover for new cars only (up to 5 years old) while comprehensive insurance gives cover for cars which are less than 15 years old.

Comprehensive Insurance Policy is ideal for

Comprehensive insurance policy is ideal for those people who are looking for a complete protection of their car because the coverage area of comprehensive insurance policy is very wide. It is also recommended for those people who are not much concerned about depreciation rate which will lower down their amount of money received under the policy.

Zero Depreciation Policy is ideal for

Zero depreciation policy is ideal for those people who consider themselves as confident drivers and can continue with little less insurance. This insurance can also be taken by those people who don’t want to lose money due to depreciation after making the claim.

Both the zero depreciation insurance and comprehensive insurance have its own pros and cons. The decision of choosing between these two is all based upon your need and situation. But to choose the best one, you need to understand both the policies well. So, analyze the above mentioned differences and features of both policies and then choose the best one for yourself.

Harjot Singh Narula

Harjot Narula is founder and CEO of ComparePolicy.com, an IRDAI approved insurance web aggregator focussed on selling online insurance for companies. Harjot has more than a decade of experience in software development and has also spent 5 years in US working for the mortgage and risk management industry.

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