Motor Insurance April 14, 2021

In case your vehicle meets with an accident, insurance companies provide coverage after deducting the depreciation cost of the vehicle and its parts excluding tires and batteries. Depreciation is nothing but the decrease in the value of your vehicle and its parts over time. Bumper-to-bumper insurance helps policyholders get comprehensive coverage without factoring in for depreciation. Also known as Nil Depreciation or Zero Depreciation, you can choose this add-on with your Car Insurance, Two wheeler Insurance and Commercial Vehicle Insurance as per your requirements.

Bumper to Bumper Insurance can be suitable for those individuals who do not want any effect of depreciation on their vehicles. Simply put, this add-on helps you to maintain the value of your vehicle and its parts over time as it was at the time of purchase. Coming to its compatibility, the following individuals can enjoy benefits with Bumper to Bumper Insurance.

  1. New Vehicle owners
  2. People living in accident-prone areas
  3. Newbie drivers who aren’t confident of their driving skills yet
  4. Regular vehicle owners who are conscious of tiny dents and bumps
  5. People who have top-class vehicles with expensive parts

Want to know more about different aspects related to Bumper to Bumper Insurance? We will discuss the same on this page. So, without any further delay, let’s start!

Key Benefits of Bumper to Bumper Insurance

In case of an accident, insurers assess depreciation in the vehicle & its parts and provide the coverage amount to policyholders accordingly. With Bumper to Bumper Insurance, you can avoid this deduction and get comprehensive coverage. Let’s look at some other key benefits of the same below.

  1. By choosing Nil Depreciation Add-on with your vehicle insurance, you can reduce your out-of-pocket expenses and maximize your overall savings.
  2. With Bumper to Bumper Insurance, you will be able to ride your vehicle peacefully without worrying about the expenses that may arise due to an accident.
  3. This add-on with your comprehensive vehicle insurance provides an extra layer of protection to your vehicle and its parts.
  4. You can also choose the Bumper to Bumper Insurance add-on at the time of renewal of your vehicle insurance if you haven’t chosen it in the first year of your policy.
  5. During the settlement for insured parts of the vehicle, insurers will not consider the depreciation factor, so you will receive a complete coverage amount.

Let’s Understand the Calculation of Depreciation

Before choosing Bumper to Bumper Insurance, you should know the calculation of depreciation in your vehicle. To know the same, you can check the below table.

Part of VehicleRate without Bumper to Bumper Insurance Add-on
Plastic Works/ Paintwork/ Rubber/ Nylon/ Batteries50%
Fiberglass Components30%
Wooden Parts5% in the first year, 10% in the second year, and so on

Note: According to rates mentioned in the table, insurers calculate the depreciation value in your vehicle. These depreciation rates are fixed by the Insurance Regulatory and Development Authority of India (IRDAI).

Besides, you should also understand the percentage of depreciation for vehicles of different ages. Refer to the below table to know the same.

Age of Vehicle% of Depreciation
Below 6 months5%
More than 6 months but less than 1 year15%
More than 1 year but less than 2 years20%
More than 2 years but less than 3 years30%
More than 3 years but less than 4 years40%
More than 4 years but less than 5 years50%

What is the Worth of Bumper to Bumper Insurance During Claims?

Let’s understand the worth of Bumper to Bumper Insurance on your overall claim amount with an example. Suppose your bike gets damaged in an accident. The repair cost for your bike is around INR 20,000. At the time of the accident, the depreciation value of different bike parts is INR 6,500. So, what claim amount will you get?

With Bumper to Bumper Insurance Add-on, you will get a claim amount of INR 20,0000.

Without Bumper to Bumper Insurance add-on, you will get a claim amount of INR 13,500 (20,000 – 6,500), as INR 6,500 will be deducted as depreciation value. 

As you can see, you can get a higher coverage amount when you choose Nil Depreciation cover add-on with your vehicle insurance. You will need to bear the depreciation cost by yourself if you do not choose this add-on.

How Much Do You Need to Pay For Bumper to Bumper Insurance?

Bumper to Bumper Insurance is an additional benefit (add-on cover) along with your comprehensive vehicle insurance. Hence, you will need to pay an additional premium apart from your standard premium amount. Since you can get a higher claim amount with this add-on, the premium amount tends to be higher than the premium of your comprehensive vehicle insurance. The overall premium amount varies from one insurer to another.

In the case of car insurance, the cost of this add-on is around 15% higher than the comprehensive car insurance plan. Also, the premium amount of Bumper to Bumper Insurance add-on depends on the following three factors.

  1. Age of your vehicle (Car, Two cwheeler or Commercial Vehicle)
  2. Model of your vehicle
  3. City where you will drive your vehicle

What is Not Covered Under Bumper to Bumper Insurance?

Keep in mind the following exclusions when choosing Bumper to Bumper Insurance add-on with your Vehicle insurance.

  1. The add-on does not cover damages to your vehicle and its parts due to regular wear & tear, mechanical or electrical breakdowns, as well as costs of engine oil, clutch oil, coolant, etc.
  2. The age of your vehicle should be less than 5 years to get coverage under the Bumper to Bumper Insurance add-on.
  3. You will not get any coverage for your vehicle’s tyres, bi-fuel kit and gas kit.
  4. Policyholders will not receive any coverage amount if they are driving their vehicles without a valid driving license.
  5. People driving under the influence of alcohol or drugs will also not get any benefits.
  6. Insurers also put a definite limit on the number of times you can claim a Zero Depreciation cover add-on within a policy year.

Top Insurance Companies Providing Bumper to Bumper Insurance

You can check the following table to know the top insurance companies that provide Bumper to Bumper insurance.

Part of VehicleRate without Bumper to Bumper Insurance Add-on
Plastic Works/ Paintwork/ Rubber/ Nylon/ Batteries50%
Fiberglass Components30%
Wooden Parts5% in the first year, 10% in the second year, and so on

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