Zero Depreciation Car Insurance: What Insurers Still Deduct

Even with a zero depreciation (zero-dep or nil-dep) add-on, your car insurer can still legitimately deduct the compulsory deductible, depreciation on tyres, tubes and batteries (usually 50%), consumables, and parts your policy does not cover. Zero-dep waives the normal age-based depreciation on metal and most body parts, so the company pays the full replacement cost of those, but it is not a blank cheque. This guide explains exactly what survives a zero-dep claim, and how to dispute a deduction that should not be there.

This is for anyone with a comprehensive or own-damage motor policy that includes a zero depreciation add-on (sometimes sold as “bumper-to-bumper”, “nil depreciation” or “depreciation waiver”). It applies to private cars and two-wheelers alike. If your settlement letter shows deductions you did not expect, this page helps you tell the legitimate cuts from the wrongful ones before you sign off.

This article stays in one lane: the permitted deductions under a zero-dep add-on and how to challenge wrongful ones. If your whole claim was rejected, or a surveyor lowballed the loss amount, see the related links at the end.

In an ordinary comprehensive policy without zero-dep, when the insurer replaces a damaged part it does not pay the full cost. It applies “depreciation” based on the age of your vehicle, because the old part was already worn. Standard IRDAI-filed motor policy wordings set this age-based schedule for most parts (other than rubber, plastic, glass and the like) roughly as follows.

A zero depreciation add-on switches this age-based depreciation to nil on metal and most plastic/fibre body parts. So if a bumper, fender or panel is replaced, the insurer pays the full new-part cost instead of cutting 25% or 40% for age. That is the saving you paid extra for.

Zero-dep removes age-based depreciation. It does not remove these, which can still come out of your settlement:

1. The compulsory (standard) deductible. This is a fixed “excess” you always bear on any own-damage claim. Standard motor wordings commonly set it at Rs 1,000 for private cars up to 1500cc and Rs 2,000 above 1500cc. It applies no matter how big the claim is. Any voluntary deductible you chose (to lower your premium) is also deducted on top.
2. Depreciation on tyres, tubes and batteries. Even with zero-dep, most wordings still apply depreciation, commonly 50%, on tyres, tubes and the battery, and often only when these are damaged along with the vehicle in the same accident. Full tyre cover usually needs a separate “Tyre Protect” type add-on.
3. Consumables. Items used up during the repair, such as engine and gearbox oil, nuts, bolts, screws, washers and lubricants, are normally not paid unless you bought a separate “consumables cover” add-on.
4. Parts not covered or excluded. Pure wear and tear, mechanical or electrical breakdown not caused by the accident, and any part the policy specifically excludes are not payable.
5. Salvage value. If a damaged part has scrap value the insurer may adjust for it.

In short, a clean zero-dep settlement should show only the deductible (and voluntary excess), tyre/tube/battery depreciation if those were hit, consumables (unless separately covered), salvage, and anything genuinely outside the policy. Anything else cut as “depreciation” on a body part is wrong.

Work through the deduction list line by line:

1. Get the claim worksheet in writing. Ask the insurer or the surveyor for the full deduction break-up, part by part, showing the gross repair cost and every cut with its reason. You are entitled to know how the figure was reached.
2. Confirm the deductible. One compulsory deductible per claim, plus any voluntary excess you opted for. More than one compulsory deductible on a single claim is not standard.
3. Check each “depreciation” line. With zero-dep, depreciation should appear only against tyres, tubes and the battery. If you see depreciation deducted from a metal panel, bumper, headlamp or other body part, flag it.
4. Check consumables. If consumables were deducted, confirm whether you actually hold a consumables add-on. If you bought one, they should not be cut.
5. Watch for double counting. A part should not have both age depreciation and a “betterment” cut applied when you hold zero-dep.

Put your objection to the insurer in writing, attaching the worksheet, and ask them to revise the settlement.

1. Raise a grievance with the insurer first. Email the insurer's customer service and its Grievance Redressal Officer (GRO). State the policy and claim number, list each disputed deduction, attach the worksheet, and quote the zero-dep add-on in your policy. Ask for a written, reasoned reply.
2. Allow the resolution window. Insurers are expected to resolve a grievance within about 15 days. Keep all acknowledgements and ticket numbers.
3. Escalate to IRDAI's Bima Bharosa portal. If the insurer does not resolve it or you are unhappy with the reply, register your complaint on the regulator's grievance portal at bimabharosa.irdai.gov.in. The portal routes and tracks your complaint with the insurer. Note: the portal never asks you for any payment.
4. Approach the Insurance Ombudsman. If still unresolved, you can file with the Insurance Ombudsman through the Council for Insurance Ombudsmen at cioins.co.in. You must have complained to the insurer first, and you must file within one year of the insurer's rejection or unsatisfactory reply (or one month after the insurer fails to respond). The Ombudsman can entertain complaints where the compensation does not exceed Rs 50 lakh.
5. Consumer court as a last resort. For larger amounts or if you want compensation beyond the Ombudsman's remit, a consumer commission complaint remains open.

1. Policy schedule and wording showing the zero-dep (and any consumables/tyre) add-on
2. Claim intimation and claim number
3. The detailed claim worksheet / deduction break-up
4. Repair estimate and final repair bill from the garage
5. Surveyor's report, if you can obtain it
6. All emails and grievance acknowledgements

A practical reading companion for citizens fighting unfair decisions is The RTI Playbook.

No. Zero depreciation waives the age-based depreciation on metal and most body parts, so the insurer pays their full replacement cost. You still bear the compulsory deductible, any voluntary excess, depreciation on tyres, tubes and battery (commonly 50%), consumables if you have no separate add-on, and anything the policy excludes.

Most zero-dep wordings carve out tyres, tubes and batteries and still apply depreciation on them, commonly 50%, often only when they are damaged in the same accident as the vehicle. To get fuller tyre protection you usually need a separate Tyre Protect type add-on. That deduction is generally legitimate; depreciation on a body panel is not.

Usually not. Consumables such as engine and gearbox oil, nuts, bolts, screws and lubricants are normally excluded from a plain zero-dep add-on. They are paid only if you separately buy a “consumables cover” add-on. Check your policy schedule to see whether you hold one before disputing a consumables deduction.

That is the classic wrongful deduction. Get the claim worksheet in writing, point to the zero-dep add-on in your policy, and ask the insurer to revise the settlement. If they refuse, escalate to the Grievance Redressal Officer, then IRDAI's Bima Bharosa portal, and then the Insurance Ombudsman within one year.

You must first complain to the insurer. Then you can approach the Ombudsman within one year of the insurer's rejection of your grievance, its unsatisfactory reply, or one month after it fails to respond. The Ombudsman handles complaints where the compensation does not exceed Rs 50 lakh.

No. The compulsory or standard deductible is a fixed excess you always bear on an own-damage claim, independent of zero-dep. It is commonly Rs 1,000 for cars up to 1500cc and Rs 2,000 above that, and applies once per claim. Any voluntary deductible you chose to cut your premium is deducted as well.

Ask for your claim worksheet in writing today and check every deduction line against the list above. If a body part shows depreciation despite your zero-dep add-on, raise it with the insurer in writing, then escalate to the Grievance Redressal Officer, then Bima Bharosa, then the Insurance Ombudsman. Keep copies of everything.

If your problem is different, these may help: when the surveyor undervalued your claim and when your motor claim was rejected.