Volkswagen Financial Services- 20 Nov 2017

Understanding a Zero-Depreciation Policy

Insuring your investments is a wise choice, well, naturally. Buying a new car is a massive milestone in an individual’s life and making sure you take good care of it, is essential. As exciting and joyful as this occasion is, it also comes with the responsibility of taking a few important decisions, one of which involves getting your car insured. But does your insurance really pay you back the full value of your investment, or is there a catch? Let’s find out.

With the many options to choose from, buyers today struggle to understand the difference in the pay-out options for their insurance, and more importantly, what the whole commotion around the idea of a zero depreciation car insurance is.

Insurance is necessary to protect your car from any threats or damages, as even the most experienced drivers find themselves in an accident with no fault of their own. It is also a fact that with time, the value of a car tends to deteriorate, even more so in case of an accident. With normal car insurance, the claim a buyer files is based on the current value of the vehicle, which is adjusted against depreciation. Therefore, buyers finds themselves shelling out more money from their own pockets in order to repair the damages, as they are unable to reimburse the full value that their original investment is worth.

In the case of a zero depreciation cover, the policy offers a complete coverage of the vehicle without calculating or considering the depreciation of the vehicle. So in case the car gets damaged, the insurer would cover the entire amount of the claim, at par with the original investment made for the car.

But there are always two sides to the coin. Nothing comes without terms and conditions of their own, neither does this policy. The Zero depreciation cover usually covers only new cars, as opposed to regular insurance covers that take under its wing both old (used) and new cars. The insurance cost is about 20-30% higher than that of normal car insurance, because of the broad coverage that it offers for your priced possession. This brings us to believe that it isn’t beneficial to the buyer to pay high premiums for a car that is not more than 3 years old. The insurer also places a yearly limit of the number of claims filed, in order to prevent people from immediately repairing every small scratch. Therefore, it is advised to check the number of claims filed and approach the insurer with the cost, only if the charges of repair are high. 

The zero depreciation cover is an extremely beneficial investment in terms of securing your car against any unforeseen damage, and helps you reclaim a substantial cost incurred from any damage, without burning a hole in your own pocket. Yes, the costs may be slightly high but the returns are essentially much higher and worth the extra penny.