The Rise of Zero-Depreciation and Add-On Covers in Motor Insurance

You finally bought your dream car. The smell of new leather, the smooth engine hum—it’s all perfect. But one scratch, one bump, or one accident can quickly turn that joy into an expensive lesson.

That’s where motor insurance comes in. Yet, a basic policy might not cover as much as you think. Enter add-on covers—smart, optional protections that give your vehicle the care it truly deserves.

Among them, the most valuable (and talked-about) one today is the Zero-Depreciation Cover. In this blog, we’ll explore what zero-dep and other add-ons really mean, why they’re becoming essential in 2025, and how they can save you lakhs in repair bills.

 

The Changing Face of Motor Insurance in India

Motor insurance has evolved far beyond “third-party liability.” Today, insurers offer comprehensive protection designed for modern cars, new driving habits, and unpredictable roads.

With more vehicles on the road, increasing repair costs, and frequent weather-related damage, standard insurance alone often falls short.
This has led to a surge in add-on covers—customisable options that let you strengthen your policy based on your needs and budget.

At VinFn, we’ve noticed a growing shift: people are moving from buying “cheap” policies to buying “complete” protection.

 

Understanding Depreciation — The Hidden Cost You Don’t See

Before we dive into zero-depreciation, let’s understand depreciation itself.

Depreciation means the reduction in your car’s value over time due to wear and tear. From the day your car leaves the showroom, its value starts dropping.
When you file a claim, the insurer deducts this depreciation from the parts being replaced. You end up paying part of the repair cost yourself.

Example:

Let’s say your bumper costs ₹20,000 to replace. After accounting for 50% depreciation on plastic parts, your insurer pays only ₹10,000—you pay the rest.

That’s where Zero-Depreciation Cover makes a difference.

 

What Is Zero-Depreciation Cover?

A Zero-Depreciation Cover (often called Bumper-to-Bumper Cover) ensures that you receive the full claim amount without any deduction for depreciation on parts replaced.

Simply put: you pay a slightly higher premium, but when your car is repaired, the insurer covers the entire cost of replaced parts—metal, plastic, or fibre—except tyres, batteries, and a few minor components.

How It Works:

Without zero-dep:

• Bumper damage: ₹20,000 
• Depreciation deduction: ₹10,000 
• You pay ₹10,000 

With zero-dep:

• Bumper damage: ₹20,000 
• Depreciation covered: ₹0 deducted 
• You pay ₹0 (apart from standard deductible, if applicable) 

It’s that simple—and that powerful.

 

Who Should Opt for a Zero-Depreciation Policy?

While everyone can benefit, certain categories of vehicle owners should consider it essential:

• New car owners: Protect your high-value asset from day one. 
• Luxury car owners: Spare parts are expensive; zero-dep saves thousands. 
• City drivers: Higher risk of minor dents, scratches, or collisions. 
• First-time car owners: Peace of mind during initial years of ownership. 

Most insurers offer zero-depreciation for vehicles up to 5 years old, though some now extend it up to 7 years.

 

Other Popular Add-On Covers Worth Considering

While zero-depreciation is the star, there are several other add-ons that enhance your motor insurance coverage significantly.

 

1. Engine Protection Cover

Your engine is your car’s heart—and the most expensive part to repair. Standard policies don’t cover damage from oil leakage, hydrostatic lock, or water ingression (common during monsoons).

An engine protection cover pays for these costly repairs, saving you from unexpected bills that can go into lakhs.

Best for: Owners in flood-prone cities like Mumbai, Chennai, or Kolkata.

 

2. Return-to-Invoice (RTI) Cover

If your car is stolen or declared a total loss, your insurer pays the Insured Declared Value (IDV)—which is lower than your original purchase price due to depreciation.

With RTI, you get the full invoice value of the car, including registration and road tax.

Example:
Car’s purchase price: ₹10 lakh
IDV (after 2 years): ₹7 lakh
RTI claim payout: ₹10 lakh

Best for: New cars (under 3 years old).

 

3. Roadside Assistance Cover

Imagine your car breaks down in the middle of nowhere. Who do you call?
A roadside assistance add-on ensures 24×7 help—towing, battery jump-start, fuel delivery, or even a mechanic—just a phone call away.

Best for: Frequent travellers and long-distance drivers.

 

4. Consumables Cover

Most policies don’t cover small but essential items like nuts, bolts, screws, lubricants, or coolant used during repairs.

A consumables cover ensures these costs are reimbursed—saving you ₹2,000–₹10,000 per claim.

 

5. Key Replacement Cover

Modern car keys are high-tech—and expensive. Losing one could cost ₹15,000–₹50,000.
This cover reimburses the cost of a replacement key and even locksmith services if needed.

 

6. Personal Accident Cover for Passengers

Most policies only include personal accident cover for the owner-driver. Adding this rider extends protection to co-passengers too.

Best for: Families and frequent carpoolers.

 

The Cost Factor: Are Add-Ons Worth the Extra Premium?

It’s natural to wonder—how much do these add-ons really add to the premium?

Typically, even after adding multiple covers, your overall premium increases by 15–25%, but your coverage becomes almost all-inclusive.

For example:

• Basic policy premium: ₹12,000/year 
• With zero-dep + engine cover + RTI + roadside assistance: ₹15,000–₹16,000/year 

That extra ₹3,000–₹4,000 can save you lakhs during repairs or total loss scenarios.

 

How Zero-Depreciation Claims Work

Filing a claim under a zero-depreciation policy is almost identical to a regular claim—with one major difference: the insurer covers the full repair cost of replaced parts.

Steps in the Process:

1. Notify your insurer immediately after an accident. 
2. Take your car to an authorised garage (preferably a cashless network garage). 
3. Survey and repair estimate are made by the insurer’s representative. 
4. Repairs begin after approval. 
5. Insurer pays the garage directly, covering the entire repair cost minus the deductible. 

At VinFn, we help customers manage this entire process—from claim initiation to settlement—ensuring no hidden deductions surprise you.

 

When Should You Add or Remove These Covers?

Add Now If:

• Your car is less than 5 years old. 
• You live in a high-traffic or flood-prone area. 
• You’ve recently financed or leased a vehicle. 

Review or Remove If:

• Your car is over 7 years old and its value has depreciated significantly. 
• Repair costs are lower than add-on premiums. 

Remember, flexibility is the key—choose add-ons that match your car’s value and driving habits.

 

How Add-Ons Improve Claim Experience

Without add-ons, claim settlements often lead to partial payments and lengthy clarifications.
With them, your coverage becomes nearly comprehensive, meaning:

• Faster approvals (less back-and-forth). 
• Higher payouts (minimal deductions). 
• Greater satisfaction (no unexpected costs). 

It’s the difference between insurance and assurance—and that’s exactly what VinFn stands for.

 

The Role of Digital Tools and Instant Policy Management

Today’s motor insurance isn’t just about paperwork. Modern insurers (including those partnered with VinFn) offer digital-first experiences like:

• Instant policy renewals online. 
• Paperless claim tracking. 
• AI-based claim approvals. 
• Mobile apps for roadside assistance and cashless garage locators. 

These features, combined with comprehensive add-ons, make managing your car insurance smoother than ever.

 

IRDAI’s Push for Customer-Centric Motor Insurance

The Insurance Regulatory and Development Authority of India (IRDAI) has encouraged insurers to make add-on covers more transparent and flexible.
Recent initiatives include:

• Allowing add-ons to be customised even mid-policy. 
• Promoting usage-based insurance (pay as you drive). 
• Simplifying claim documentation for faster processing. 

This shift means car owners now have greater control over what they pay for—and what they get.

 

VinFn’s Expert Tip: Customise, Don’t Copy

Many car owners simply copy their friend’s or dealer’s insurance choices. But your car, city, and driving habits are unique.

That’s why VinFn’s advisors help you custom-build your policy:

• If you drive daily in a metro → choose zero-dep + engine protection. 
• If you live in a small town → consumables and roadside assistance may suffice. 
• If your car is brand new → add RTI and key replacement cover. 

The goal is to make your policy as personal as your vehicle.

 

Common Myths About Zero-Depreciation and Add-Ons

Let’s bust a few misconceptions we often hear from car owners:

Myth 1: “Zero-dep means I’ll never pay anything.”
Truth: You still pay mandatory deductibles and uninsurable costs (like tyres and batteries).

Myth 2: “Add-ons are unnecessary for careful drivers.”
Truth: Accidents, theft, or natural calamities can happen to anyone—add-ons protect against unpredictable risks.

Myth 3: “Add-ons are too expensive.”
Truth: The extra cost is minimal compared to potential repair expenses. It’s better to pay ₹2,000 more now than ₹50,000 later.

 

How VinFn Makes Motor Insurance Smarter

VinFn isn’t just another insurance marketplace—we simplify the complexity of car insurance with:

• Transparent comparisons across top insurers. 
• Education-first guidance—helping you understand, not just buy. 
• Expert claim assistance for faster settlements. 
• Tailored recommendations based on your car’s model, usage, and location. 

We believe motor insurance should give you control, clarity, and confidence—not confusion.

 

Conclusion: Small Add-Ons, Big Peace of Mind

Your car deserves more than just basic coverage. With add-ons like Zero-Depreciation, Engine Protection, and Return-to-Invoice, you’re not only safeguarding your vehicle but also your finances.

In the long run, these small additions make a big difference—turning your policy from a backup plan into a true financial safety net.

So before you renew your car insurance this year, take a moment to review your options. The right add-ons can save you from stress, surprise bills, and sleepless nights.

Insurance Simplified, Assurance Amplified — with VinFn.