Is Nil Depreciation Cover Worth It?

The Nil Depreciation rider, also called Zero-depreciation or Bumper-to-Bumper rider, in motor insurance is an add-on provided with comprehensive vehicle or two-wheeler insurance policies. Without it, insurance companies always deduct a percentage of the repair costs billed in a partial loss claim payout, to account for ‘wear and tear’ of the vehicle.

Many claim that a zero-depreciation add-on is needed only if the vehicle is less than around 5 years old. It is worthwhile to check the validity of this statement.

What the Depreciation Deduction Actually Costs You

The depreciation deductions on any partial loss claim payout follow a landmark IRDAI circular issued in January 2013 (IRDA/NL/ORD/MISC/006/01/2013), as an update on the General Regulation 9 (GR.9) of the India Motor Tariff.

The Math: What Nil Depreciation Saves You, Age by Age

Taking an example to see how the deductions combine,

If a car claims for insurance payout and reports a total repair bill of ₹40,000. The repair cost breakdown: ₹15,000 for bumper and headlight (plastic & rubber parts) replacement, and ₹25,000 for fender and door panel (metal parts) replacement. The insurance policy pays for the zero-depreciation option.

The depreciation deducted from partial claim motor insurance payouts, without the zero-depreciation rider, is as follows,

As an illustrative example, a new petrol-run car bought in Bangalore, the Tata Nexon Smart +1.2 AMT, has a showroom price of ₹7,39,990. Manufactured 6 months ago, the quote for its yearly Own-Damage premium is ₹17,187, and the Nil-Depreciation add-on cost is ₹4,400 annually (Source: Zurich Kotak General Insurance premium calculator, accessed July 2026). For this new car, paying that added premium makes sense, seeing that the repair cost deductions would otherwise be high.

Without the rider, the repair cost deductions also increase with the vehicle's age. Thus, an older vehicle gains more from the nil-depreciation add-on.

In reality, most insurers stop offering the zero-depreciation rider for vehicles older than 5 years. And, the premium cost on the rider also decreases with the vehicle age. Taking the same car, the Tata Nexon, its nil-depreciation premium decreased to ₹2,671 in 4 years (Source: Zurich Kotak General Insurance premium calculator, accessed July 2026).

Keep It or Drop It? A Decision Matrix

For older vehicles, there are situations when vehicle owners may still benefit from the nil-depreciation add-on:

● When the vehicle is used in daily commuting – This will cause wear and tear on vehicles and increase depreciation deductions on the claim payout.

● When the driver has a high risk of accident, including new drivers – For such drivers, the frequency and price of repairs go up, and they justify keeping the add-on on their old vehicles.

● When the vehicle has very expensive spare parts – Luxury cars can easily have repair costs for a single part replacement crossing ₹60,000 to ₹100,000, which again justifies the higher premium on their old vehicle.

For an old vehicle that may still need the Nil-Depreciation rider, a good choice would be to buy from insurers that tailor their plans to the specific needs of such vehicles.

Why SimpliInsure?

Arriving at the correct decision that cares for your car can be exhausting. SimpliInsure’s motor insurance advisors are tied up with 30+ motor insurance providers, and can present a rider quote tailored to your commuting behaviour and vehicle type, along with full transparency on sub-limits or claim-count caps. Every quote is explained in plain language before you buy. Our Car Insurance plans and Two Wheeler Insurance plans provide full claim assistance.

Conclusion

On new vehicles, buying the nil-depreciation rider is a no-brainer. But on older vehicles, it is justified only if the driver expects regular repairs or they own expensive luxury cars.

Call SimpliInsure on +91 95133 55661, and within one business day, know if your vehicle needs the Nil-Depreciation rider, its cost, and what it won't cover.

Disclaimer: This content is for informational purposes only and should not be treated as financial, medical, or insurance advice. Policy terms, exclusions, and benefits vary across insurers. Please review official policy documents and seek professional guidance before making decisions.