by sanjay bist
Published Mon, Apr 3rd 2017, 18:26 | Business
Your car is not an asset but a depreciating good. It depreciates and affects your claim settlement. You may feel that a comprehensive coverage for your car may eliminate the incidence of out-of-pocket expenses; however, you may be mistaken.
When a person file’s a claim, your car insured will apply a rather complex formula to ascertain the amount payable. It will consider the depreciating value of the car, leaving you to pay a hefty amount of the overall costs.
Let's understand the concept of zero depreciation cover. A Zero depreciation cover is a type of car insurance coverage that will promise to bear the entire cost of the damages without factoring in for depreciation value. If your car is damaged following a collision, for instance, and you file a claim, the insurance firm will cover up the entire costs.
In case of standard comprehensive cover, it will make estimates based on the current value of your vehicle. Thus, ‘current value’ factors in the depreciation on your motor vehicle. If your car is involved in any form of accident, your standard car insurance policy will offer you the coverage amount subtracting the depreciation value whereas the policy with zero depreciation will foot the bill regardless of the current value of your motor.
Therefore, insurance experts always emphasize on purchasing car insurance cover with extended rider benefit of zero depreciation value.
Zero depreciation clearly defines their advantage over standard car policy. However, just like every good thing has cost tag attached to it, this rider will also come at a slightly higher cost of around 20 to 25 percent compared to your standard no frills policy. But, it gives you a peace of mind in advance that you’re already paying towards those future costs. Customer looking for affordable insurance will obviously be hesitant to add this rider to their policy; however, the prospect of zero depreciation will attract those customers who won’t mind the higher annual rates because it promises peace of mind.
This car insurance policy might limit the number of claims that you make annually. It is necessary because the consumer might keep filing claims for petty dent or scratches. This cover applies to new cars with the age limit being three years. If your vehicle is older, there you can’t avail this rider benefit. Technically speaking shelling out more premiums on a five to seven-year-old vehicle will not be a sensible move. Many experts opine that zero depreciation works only for new drivers as they are likely at a risk of dents or damage at early stages. However, such is not the case. At times, even an experienced driver might get involved in accidents, in spite of not being at fault. Therefore, experts say those customers who own luxurious sedans, SUVs or other imported cars should go for this rider benefits that will provide full cover for accidental damages, man-made incidents or natural calamities. It is a good buy for new car owners provided the premium costs does not pinch the pockets.