[SS-Traveller]

Zero depreciation policies are the latest fab in motor insurance and are slowly turning out to be a hit with buyers of top and mid segment cars. As opposed to comprehensive cover, this cover offers full settlement without any write-off for depreciation. Normal motor car policies pay only 50 percent of plastic/rubber parts and 5 to 50 percent deduction on metallic/glass parts in accident claims. The only downside to these policies is that they cost a bit more than the normal policies.

IRDA allowed these policies to make their entry into the Indian market about two years ago. The reason behind the success of these policies is that in standard motor policies the customer has to pay a big amount for fixing rubber and plastic parts, and a hefty portion of the repairing cost has to be borne by the customer.

The zero depreciation policy compensates the claim fully for a premium amount which is around 20 percent higher than the normal cover.

Feedback from those covered by zero depreciation insurance appears to indicate that they could not care less for dents and scratches suffered by their cars while driving, since expensive repairs can be availed of, almost free of cost. ASC body shops also report that a majority of accidental damages repaired by them seem to be covered by zero depreciation insurance, and owners display a cavalier attitude about accidents, asking the workshops to fix their cars "as good as new", whatever be the expense.

It may not be too long before insurance companies wake up to the truth of losing money through heavy claims by those insured under zero depreciation insurance cover, and discontinue the facility.

[ACM]

I feel this does not impact the way we drive. It just is an expensive option to give us greater peace of mind. In the USA we do find vehicles covered upto 100% of the cost in most cases (except when stolen - where in depeciated cost comes into play). In India Insurance really does not offer the kind of peace of mind it should and we do not get what is rightfully ours.

The full coverage system that we can opt for now takes away the chance for the insurance company handling this in an adhoc manner - which is good. Don't really believe that we would drive any worse. Infact the kind of people who would take such a cover (paying the higher charge) are likely to be those really concerned about their vehicle and who would like to avoid even a scratch.

[AbhiJ]

I would agree, 0% dep policies are being abused, but mainly by the garages.

I had a claim under 0% depreciation last year, and a very lightly damaged panel on my CR-V was replaced by the Honda dealership since according to them it was was "unrepairable".

I also didn't care because the swap was not costing me anything. However, honestly if I would have to pay 30% / 40% of the panel value, I can assure you it would have been REPAIRED and not replaced.

[Vid6639]

Yes but if you drive carelessly and do need insurance you also lose your no claim bonus the next year making insurance renewal a very expensive affair.

[.Albatross.]

Originally Posted by ACM

I feel this does not impact the way we drive. It just is an expensive option to give us greater peace of mind. In the USA we do find vehicles covered upto 100% of the cost in most cases (except when stolen - where in depeciated cost comes into play). In India Insurance really does not offer the kind of peace of mind it should and we do not get what is rightfully ours.

The full coverage system that we can opt for now takes away the chance for the insurance company handling this in an adhoc manner - which is good. Don't really believe that we would drive any worse. Infact the kind of people who would take such a cover (paying the higher charge) are likely to be those really concerned about their vehicle and who would like to avoid even a scratch.

I agree. The zero depriciation insurance comes at a higher price and does not take care of the no claim bonus and does not insure the car from having a bad maintenence history hence a poor resale value.

Somebody known damaged the underbody of their newly acquired Volvo s60 and ended up spending 80k for the oil refills, transportation costs etc even after having a zero depriciation policy. This shows you may be charged more than the file charges.

The resale of the car which would have this kind of history at the workshop would not find a buyer at the market price .

Small cars might be an exception here.

[Warwithwheels]

Originally Posted by SS-Traveller

....It may not be too long before insurance companies wake up to the truth of losing money through heavy claims by those insured under zero depreciation insurance cover, and discontinue the facility.

Bang on!

I was trying to get a zero depreciation policy for my "to be" delivered figo from my existing Insurance provider - ICICI Lombard.

However those guys flatly refused saying that they've stopped issuing Zero Depreciation Policy for TATA, FORD and MARUTI cars because of the high number of claims.

[el lobo 6061]

Are Zero Dep Policy being abused? Maybe but we all are opportunistic. Just like subsidy on diesel powered cars. Even I have Zero Dep Policy but I don't drive rashly in the name of everything being covered.

There are a few criteria to Zero Dep Policy which I think all should be aware of.

• They cost more than a normal comprehensive policy and many a times difference can be as much as twice of the former. So 0 Dep Policy are not cheap.
• If you claim insurance you lose your No Claim Bonus(NCB) on the next renewal. I got 20% NCB on the renewal as I didn't claim anything during the first year which certainly makes difference in the premium.
• With the increasing years NCB also increases and no one would like to lose it. 50% NCB is too good for a car costing above 20+ Lac.
• Zero Dep Policy are not available throught the lifespan of the car.
• BajajAllianz provides only 5 yrs of Zero Dep Policy cover after which you have to buy Comprehensive policy only.
• BhartiAxa provides just 3 yrs of Zero Dep Policy.
• United India Insurance provides 5 yrs of Zero Dep Policy only.
• IIRC some Zero Dep Insurance companies only allow 1-2 claims in a year.

So ultimately you have Zero Dep Policy for just 5 yrs, how much will one abuse it and no one likes to get involved in accidents every month.

For me NCB is more important than claiming insurance for just a small scratch on bumper.

Just my 2p.

[Karan1981]

I can tell you for sure that I purchased the zero deb policy for my car only to protect it from the many morons who think no end of themselves and are on road daily to ensure no matter what car you drive and what your driving style is, the chances of your car getting scratches and small dents is almost 100%.

They try to squeeze out of every little space available on either sides and bumper to bumper's definition is touch your tyre or bumper to the other vehicles bumper every time you have to break.

I don't know about others, but I pad almost 16k extra for this zero deb policy to ensure 100% coverage of all plastics, orvm, etc and complete peace of mind.

I doubt the insurance companies will discontinue the product due to many claims, however the chances of it getting costlier does exist in the near future IMO.

[simplyself]

I dont think zero dep policy would encourage a driver to drive recklessly. It may increase confidence but not recklessness.

However, claims may increase because there is no depreciation and one would be tempted to stake claim for a minor dent/ scratch which otherwise would have been left alone.

I have a zero dep policy for my 2 - month old car. I was hit from behind by another car. The first thought even before I got out of my car was that the reimbursement from insurer would be full..even before I saw the damage. A few seconds later I came to conclusion that even at zero dep the damage shouldnt be claimed ( a few minor scratches). The point is, it gives you peace of mind. However, one can easily fake the extent of damage. Would be interesting to see how the insurers are faring with this policy.

[SS-Traveller]

Originally Posted by AbhiJ

I would agree, 0% dep policies are being abused, but mainly by the garages.

I believe so too - the garages find zero-dep covered customers to be bigger money spinners for them.

Originally Posted by ACM

I feel this does not impact the way we drive.
Don't really believe that we would drive any worse.

Not intentionally. But my observation (at least, in the Delhi-NCR region) is that brash kids of rich dads get handed a fast car with zero-dep cover, and dad is happy about minimal repair expenses while son has fun on the roads. It is another matter that such brash sons get killed or kill others once in a while...

I say this from first-hand experience...

Originally Posted by Vid6639

...you also lose your no claim bonus...

Originally Posted by el lobo 6061

• If you claim insurance you lose your No Claim Bonus(NCB) on the next renewal. I got 20% NCB on the renewal as I didn't claim anything during the first year which certainly makes difference in the premium.

10% or thereabouts. Small change for some.

Originally Posted by .Albatross.

...does not insure the car from having a bad maintenence history hence a poor resale value.
The resale of the car which would have this kind of history at the workshop would not find a buyer at the market price .

How many of us actually investigate accident history of cars we buy? And do the ASC workshops really make such history available to the casual enquiry from a potential buyer? With panel changes and high-cost paint jobs, accident repairs become almost undetectable unless one has vast experience about how to detect it.

Originally Posted by Warwithwheels

I was trying to get a zero depreciation policy for my "to be" delivered figo from my existing Insurance provider - ICICI Lombard.

However those guys flatly refused saying that they've stopped issuing Zero Depreciation Policy for TATA, FORD and MARUTI cars because of the high number of claims.

That's news! So refusal to issue zero-dep policies has already started.

Originally Posted by el lobo 6061

For me NCB is more important than claiming insurance for just a small scratch on bumper.

What some folks do is collect those scratches over a period of, say, 6 months, then ask for a full repair job covering all of them. The workshops help in no small measure, partly by *replacing* instead of *repairing*.

Originally Posted by Karan1981

...no matter what car you drive and what your driving style is, the chances of your car getting scratches and small dents is almost 100%.

No offence to you personally, Karan, but that's what I mean - the attitude among some drivers, that says: "I'm going to get scratches no matter how hard I try, so why bother trying too hard? At least my zero dep insurance is going to make sure I have a gleaming car a small cost."

Originally Posted by Karan1981

I doubt the insurance companies will discontinue the product due to many claims, however the chances of it getting costlier does exist in the near future IMO.

That is another big possibility - hike in premiums.

[F50]

Originally Posted by SS-Traveller

It may not be too long before insurance companies wake up to the truth of losing money through heavy claims by those insured under zero depreciation insurance cover, and discontinue the facility.

Great topic. The same was up for discussion in our office last week.

Well I do agree with your point of view. Yes people are bit carefree (or careless) once they are covered under Zero Dep. We love cars and we do take utmost care to keep it scratch less but not many love them as the way we do.

Under Zero Dep once can claim only twice a year. Saying that the chances of the same company renewing the policy are slim unless you are staying in jugaad city. On top of that, the Zero Dep rating changes every year. And no NCB.

Example: Bajaj Allianz will cleanly refuse to renew Zero Dep policy if there are 2 claims registered in a year

Peaceful insurance demands people to be careful or else,

a) Lose NCB + Reduced Commercial Discount

b) Two claims a year and same company won't renew. Adds headache to hunt for another company to renew

c) Rating goes up, so does your premium (for Zero Dep)


So according to me being careless is NOT the smartest thing to do.

Originally Posted by SS-Traveller

Not intentionally. But my observation (at least, in the Delhi-NCR region) is that brash kids of rich dads get handed a fast car with zero-dep cover, and dad is happy about minimal repair expenses while son has fun on the roads. It is another matter that such brash sons get killed or kill others once in a while...

I say this from first-hand experience...

[Karan1981]

Originally Posted by SS-Traveller

No offence to you personally, Karan, but that's what I mean - the attitude among some drivers, that says: "I'm going to get scratches no matter how hard I try, so why bother trying too hard? At least my zero dep insurance is going to make sure I have a gleaming car a small cost."

That is another big possibility - hike in premiums.

Buddy i can talk for myself not others that I don't drive carelessly nor do I think any responsible or sane person would want to scratch their car because they can claim insurance which is again a loss as we lost NCB!

Again the product is great, but as they say there are always some morons who misuse it so I don't disagree with you completely!

[mayankjha1806]

I believe the numbers, and if they are true soon Insurance companies will do something about it to ensure they don't continue to bleed. Unfortunately when they do something everyone suffers and not just the folks who are at fault (Look at third party cover).

I am not really a big fan of 0% dep policies, as i do not think i would need it (Unless i get handed over a lemon). In last 3 years there have been 0 claims on my insurance.

I wish sooner or later Insurance companies will work towards giving incentive to defensive and safe driving, that looks like a good thing over long term.

[ghodlur]

Zero dep option is in itself a great feature, but AFAIK it was being offered for new car policies only and that too for the first three years of ownership. The Insurers saw a great oppurtunity here and have started offering the product now for longer durations too. Cant say whether the option is being misused but there is definitley a rise in the claims under the zero dep pretext. The Insurers will now have to come up with a caveat to prevent the loss due to zero dep option.

I am surprised that Public Insurers are offering zero dep for longer periods that the pvt ones.

[drmohitg]

I don't think that its encouraging careless driving. The increased number of claims are just because more people are willing to get the damage repaired/replaced since they do not have to pay rather than continue living with it. The companies are still making a lot of money I feel since a lot of people do pay bigger premiums for these insurance and not claim anything. A case in example being me. We have had many cars over the last 2 decades and never had to claim insurance. Most of our cars have NCB of 50% and more.