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Why Depreciation Reimbursement For Car Insurance?

Most car owners tend to forget that their cars are subject to depreciation the moment the vehicle leaves the showroom. We often think of depreciation as something that affects the vehicle only a few years down the line. However, your car undergoes depreciation in value within the first year of purchase. This depreciation is taken into consideration when insurers reimburse you for a claim amount. To protect yourself from such unavoidable losses, you can opt for depreciation reimbursement cover in your motor insurance plan. Car insurance plans with this Add-On are also commonly referred as zero depreciation car insurance.

What is Depreciation? How is Depreciation Calculated?

Regular wear and tear caused by constant usage of the vehicle leads to depreciation in the value of your car’s parts. When you raise a claim for accidental damage, the rate of depreciation affects the payout that you ultimately get. Now, you may wonder about the rate at which depreciation gets calculated. The depreciation cost deduction is determined by IRDAI to ensure standardisation across insurers. Here is a look at this rate:

  • For all rubber/ nylon / plastic parts, tyres, tubes, batteries and air bags - 50%
  • For fibre glass components - 30%
  • For all parts made of glass - Nil
  • Rate of depreciation for all other parts including wooden parts will be as per the following schedule.

Rate of Depreciation for Painting: In the case of painting, the depreciation rate of 50% shall be applied only on the material cost of total painting charges. In case of a consolidated bill for painting charges, the material component shall be considered as 25% of total painting charges for the purpose of applying the depreciation.

As we can see, the rate of depreciation is quite high once the vehicle crosses two years of age. Thus, as a vehicle owner, a large chunk of the claims cost might end up coming out of your own pocket. This is where having a depreciation reimbursement Add-On can take care of your financial liabilities.

What is Depreciation Reimbursement Add-On in Car Insurance?

Depreciation reimbursement or zero depreciation in car insurance is an add on cover with which your insurer pays you the value of a claim without considering depreciation costs. These depreciation costs mainly affect the parts of your car that are made from certain materials such as rubber, fibre glass, or plastic. Common examples of car parts that usually get impacted by depreciation costs are airbags and tyres.

Without depreciation reimbursement Add-On, you would end up shouldering a lot of the costs affecting these parts on your own. And if you have a high-end vehicle, the price for such parts can add up to quite a bit.

Now that we know what is depreciation reimbursement Add-On in car insurance, let’s look at what this Add-On really covers.

Key Features and Benefits of Depreciation Reimbursement in Car Insurance

When you opt for depreciation reimbursement in Private Car Insurance Policy- Package by SBI General, you enjoy many benefits such as:

Affordability for car parts

If you don’t have the depreciation add on cover, you may feel tempted to buy a cheaper alternative part for your vehicle. This part probably won’t function as an original would and might even endanger your safety on the road. When you buy depreciation reimbursement add on, you give yourself the space to truly get the best for your vehicle to ensure that your car stays in top shape and you stay safe on the road.

Improved coverage of plan

Finally, the depreciation reimbursement Add-On cover helps you make the most of your comprehensive car insurance plan. It allows you to benefit from the protection of this coverage to its full potential by filling in the gaps.

Exclusions of Depreciation Reimbursement Cover

There are certain situations that are excluded from coverage under the depreciation reimbursement add on. Let’s take a look at some of them:

Not having a valid driver’s license

Any claims made for driving without a valid driver’s license will not be honoured by the insurer.

Factors Affecting the Premium of Car Insurance with
Depreciation Reimbursement

As we know there are certain factors that affect your car insurance premium. Likewise, the insurer has to consider certain other factors when determining the cost of the depreciation reimbursement Add-On. The cost of this cover is mainly determined by the following factors:

Age of the car

An older car might have a higher cost of parts and therefore, the premium for the depreciation reimbursement add on might increase.

Make and model of the vehicle being insured

The cost of spare parts and accessories of the vehicle may vary based on its make and model. The tyres for a luxury or sports car will cost much more than the tyres for a regular hatchback or sedan. Therefore, the cost of the depreciation reimbursement cover also varies based on the make and model of the insured vehicle. When buying the depreciation reimbursement cover, make sure to evaluate the cost of the cover against the age of your car and the potential benefits that you stand to gain. With this proper estimation, you will be able to understand whether the depreciation reimbursement cover can truly prove helpful for you.

Advantages of Depreciation Reimbursement Car Add-On

Depreciation reimbursement or zero depreciation car insurance can prove to be extremely useful in the following scenarios:

  • As we all know, the costs of replacing spare parts in vehicles, especially luxury cars, can be exorbitant. The cost of replacement of a single headlight or bumper in an accident can run quite high. In such cases, depreciation reimbursement cover can help you reduce your financial liabilities.
  • Your car starts depreciating the moment you take it out of the showroom. By opting for a depreciation reimbursement cover, you can secure your finances with the coverage given by this add on.

How to Buy the Depreciation Reimbursement Add-On Cover?

You can buy depreciation reimbursement Add-On cover when you purchase or renew your comprehensive car insurance policy. All you need to do is select this add on when buying coverage. You can buy your comprehensive car insurance plan from your preferred insurer online or by visiting their branch office. We do recommend that you buy the depreciation reimbursement add on offered by SBI General Insurance. The process of purchasing this Add-On is quick and convenient. You can access our website 24/7 all through the year. Simply browse through the plan options, fill in your details and make the payment on our secure payment gateway. Once you have completed the payment, we will email a soft copy of your comprehensive car insurance plan with depreciation reimbursement cover to you. You can save this file or take a printout and keep it handy in your vehicle.


No, there are no limits to how many times you can use the depreciation reimbursement add on. The only condition that you need to remember is that your claims will be paid within the scope of the policy you have selected.

No, the depreciation reimbursement cover is only available with comprehensive car insurance.

You can quickly raise your claims online with SBI General Insurance. Here’s how can raise cashless or reimbursement claims:

Just follow a few simple steps for a seamless claim processing journey.

  • Log in to with your registered mobile number and click on the ‘Claim Intimation’ under claim section.
  • You may also utilize the service of ‘Sakhi’ our voice assisted Chatbot for quick Motor claim registration and checking your current claim status.
  • You can also call on 1800-102-1111 for claim registration.
  • Alternately you can SMS “CLAIM” to 561612 or email your details on and get your claim number / reference number.
  • You can also raise it through the app by tapping on the claims section and following the prompts.
  • Our corporate office is at 9th Floor, A & B Wing, Fulcrum Building, Sahar Road, Andheri (East), Mumbai 400099. Our office timings are 9:30 AM to 5:30 PM (Monday to Friday). You may also call us at 1800 102 1111. Alternatively, you can find relevant claim forms on our website at

Private Car Insurance Policy - Package (UIN: IRDAN144RP0005V03201112)

Depreciation Reimbursement – (UIN: IRDAN144RP0005V03201112/A0007V02201314)

Disclaimer: The above information is indicative in nature, for more details on complete coverage and terms and conditions, please contact our nearest office and also read the policy document and sales brochure carefully before concluding a sale.