Purchasing a car insurance policy is not only imperative by law but also extremely essential for one’s financial security plan. As most of us know, a car insurance policy is a way of making sure that you and your loved ones are not under financial duress in case of any unfortunate circumstances involving the vehicle. When you plan to buy a car insurance policy, there are certain terms that might throw you off such as “own damage” or “zero depreciation” – understanding these terms is essential when purchasing a policy.
Own Damage cover policy primarily covers any costs against your car. This is the only plan that allows you to claim your own damage and can be also accessed if it’s part of your comprehensive car insurance policy. On the other hand, Zero Depreciation means in case your car has damage, the insurer will be paying you a higher amount as he/she will not deduct the depreciation value of the car. In usual circumstances, when providing a claim for a car, the insurer will calculate depreciation based on the age of the car and deduct that value from the final claim amount.
To familiarize yourself with these two terms, it’s important to also understand the difference between the two –
| Own Damage | Zero Depreciation |
| The premium payment is lower than the damage cover. | The premium payable amount is higher in a zero-depreciation plan. |
| In an own damage plan, the value of depreciation will increase with the life span of the car | The depreciation value remains unaffected in this type of plan. |
| Since the depreciation value is calculated when providing a claim, the claim amount on the car will be lower. | As there is no impact on the depreciation value, the claim amount will be higher in a Zero Depreciation plan. |
At the end of the day, the plan you choose should be linked to your needs and priorities. We do believe that an own damage cover is for someone who has a more rigid budget when it comes to car insurance, someone who follows the norms and is usually a safe driver. This type of cover is also perfect for someone who has a car that is 5+ years old – in these scenarios, more often than not, the insurance company will not provide a zero-depreciation plan.
On the contrary, if you’re someone who owns a less than 5-year-old car and is ready to spend additional money on add-ons, a zero-depreciation plan is great! Since it will give you a higher amount at the time of claim. This kind of plan is also suitable for young or amateur drivers – who have the probability of getting into accidents or mishaps.
It’s important that you reflect on your needs and make the right choice for your financial security. We at Chola MS, offer both Own Damage and Zero Depreciation covers depending on your needs. These policies can be individually taken on as additional coverage or can be clubbed with the Comprehensive car insurance policy plan.
