While buying car insurance, many people remain confused as to what should be the basic coverage and which add-ons are beneficial. On-damage i.e. Own Damage (OD) cover and Zero Depreciation (Zero Dep) are two important terms. OD protects against damage caused to your own car, while Zero Dep eliminates the depreciation deduction on parts at the time of claim.
Nowadays, in view of the rising repair costs and inflation of parts, it is important to make the right choice between the two. In this article we will understand the difference in detail. Claim process, premium impact and also which option is better for you? By choosing the right insurance, you can avoid unnecessary expenses and get complete protection.
What is Own Damage Insurance?
Own Damage cover primarily provides protection against damage caused to your car. This includes road accidents, theft, fire, natural disasters (flood, earthquake), riots etc. It can be purchased along with third party insurance and is also available as a standalone OD policy.
In OD cover, depreciation is deducted on the cost of parts at the time of claim settlement. For example, the reduction may be 50% on plastic/rubber parts, 0-50% on metal parts depending on age. Labor charges are usually full, but parts costs are reduced. For older cars or those looking for a budget-friendly option, the OD offers basic safety. As per IRDAI regulations, it is available in standalone form from 2019.
What does Zero Dep mean?
Zero Depreciation is an add-on cover taken with an OD or Comprehensive policy. This is also called bumper-to-bumper or Nil Depreciation. In this, there is no depreciation deduction on the parts replaced at the time of claim. Meaning, the insurance company covers the entire bill (after certain deductibles).
This is especially beneficial for new or luxury cars, because parts are expensive and the amount of depreciation can be high. Generally it is available for cars up to 5 years old. The premium is 15-30% more than the OD premium, but the savings in claims are considerable. The number of claims in this add-on is limited (2-3 claims per). These are the differences between the two-
- OD is a policy (Standalone), whereas Zero Dep is just an add-on.
- OD is cheap, Zero Dep is expensive (additional 10-30% cost).
- Due to deduction of depreciation in OD, claim is reduced, full payout is available in Zero Dep.
- OD for older cars or low budget ones, Zero Dep better for new/expensive cars.
- Reduction in OD based on age and parts (eg 50% on plastic), Zero deduction in Zero Dep.
Example: Of a repair bill of ₹50,000, you may lose out on ₹15,000-20,000 in OD, whereas in Zero Dep, almost the entire bill gets claimed.
Which one is right to buy?
This completely depends on the age, value, usage and budget of your car. If the car is new (0-5 years) then it is better to take comprehensive or OD with zero dip. The cost of the additional premium will be covered in just one or two claims. This is necessary in luxury or high-value cars. At the same time, for an old car, only OD is sufficient because Zero Dep can be expensive if the parts are cheap and depreciation is high.
Advice and Precautions
When making a claim, report it within 30 days, otherwise it may be rejected. Also check out other add-ons like engine protection, consumables. Choose the right IDV (Insured Declared Value) as it decides the upper limit of the claim. Always choose IRDAI approved insurance company and read the policy document carefully.