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Two neighbours’ daily routine of watering plants leads to an interesting conversation.
Sindu: Looks like most of my pots need repairing.
Bindu: Wear and tear spoils them every year.
Sindu: Yes, and burns a hole in my pocket, too, every time I fix them.
Bindu: It’s best to replace your pots before they start ruining the plants. That’s how it works for other things.
Sindu: Okay. So, how do you protect yourself from wear and tear?
Bindu: Not yourself, but your vehicle! In motor insurance, you can opt for what’s called a zero depreciation cover.
Sindu: What is that?
Bindu: Well, under a regular motor cover, when you make a claim, your insurer will apply the depreciation rate to the damages sustained by car parts such as metals, tyres, paintings, batteries and glass. These are deducted before the final payment (for car damage claim) is made to you. So. But a zero depreciation cover offers complete coverage for all parts of a vehicle without any deduction of depreciation. That’s why it’s also called bumper-to-bumper insurance.
Sindu: Good! I will just take this cover for my good old car.
Bindu: Ha, there’s the catch! It is not for all cars. Zero depreciation is beneficial only for new cars or for cars up to three years old. Some insurers do offer this for cars that are up to five years old. It can also depend on the kilometres your car has clocked.
Besides the number of claims under a zero depreciation cover is limited and varies from one insurer to another.
Sindu: Alright! But is it pricey?
Bindu: Well, the zero depreciation rider will usually cost 15-20 per cent higher.
Sindu: That’s a lot. But given the advantages, it seems worth the money.
Bindu: It is, but it comes with a few downsides.
One, the policy doesn’t cover damage to the car engine due to water ingression or oil leakage. Two, it doesn’t cover standard wear and tear to components such as clutches, bearings and plates, and mechanical failure not due to accidents. More importantly, there is a compulsory deductible clause in the event of any claim, just like it is for many standard motor insurance cover. So, before you opt for this cover, find out the all details.
Sindu: Any other exclusions, I should know of ?
Bindu: No claim will be paid if the driver was driving without a valid driving licence or if he is found to be drunk!
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