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Know The Coverage Provided Under Bumper To Bumper Policy In Your Car Insurance Plan

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A Bumper to Bumper policy, also known as zero-depreciation or nil depreciation cover, is an add on cover that ignores the depreciation of your car’s value when calculating the coverage. Depreciation is the loss in your car’s and car accessories’ value over time. The rate of depreciation for car parts and accessories has been set forth by the government of India as:

  • 50% on the parts that take high wear and tear including rubber/plastic parts, batteries, and tyres/tubes
  • 30% on car parts and accessories made of glass or fibreglass.
  • 0%-50% on metallic car parts or accessories based on car’s age
  • 50% on the vehicle’s paint

The depreciation rates for other car parts are as below:

Vehicle’s Age Rate of Depreciation
More than 6 months but less than 1 year 5%
1 year to 2 years 10%
2 years to 3 years 15%
3 years to 4 years 25%
4 years to 5 years 35%
5 years to 10 years 40%
Above 10 years 50%

 

Your car’s Insured Declared Value is determined after reducing the depreciation from its original value. This means, if you suffer a loss event – you will have to bear the depreciation cost.

With a Bumper-to-Bumper policy in your Car Insurance plan, the insurer ignores the concept of depreciation and pays for the replacement/ repair of depreciated car parts as well. This a great deal for new car owners. It also saves considerable costs for owners of expensive cars. Car owners who drive in areas that are prone to accidents can also choose to have this add-on cover to increase the safety net.

Limitations

The following scenarios are not covered by a Bumper to Bumper policy. This is done to keep the premium reasonable for most owner-drivers.

  1. This cover is not provided for cars older than three years
  2. Damage resulting from oil leakage and water ingression is not covered
  3. Depreciation cost associated with tyres, clutch plates, bearings etc. are not covered
  4. Cars that are driven beyond the limitations of usage are not covered. For example, a commercial vehicle used for personal purposes will not get the cover
  5. If the driver did not have a valid licence, was underage or was driving under the influence of alcohol – the cover will be denied
  6. The number of claims under this type of policy is generally capped
  7. There may be a deductible component to the claim amount.

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