• A Complete Guide on Bumper to Bumper Car Insurance Policy

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    Depreciation is one of the factors that determine your vehicle’s Insured Declared Value at the time of your insurance policy purchase or renewal. Depreciation is the loss in the value f the car or the car parts with respect to the car’s age. Depreciation is generally of two kinds, depreciation on car parts and depreciation on the car.

    Now Bumper to Bumper cover which is also known as ‘Zero Depreciation cover’ or ‘Nil Depreciation cover’ is an add-on cover which when added to your base policy or comprehensive insurance policy offers you the complete coverage which includes protecting the value of your vehicle’s parts and accessories.

    Coverage for regular wear and tear of a vehicle is not included in a comprehensive car insurance policy. Hence, in the case of any mishap, if you haven’t opted for Bumper to Bumper cover, you will have to pay for the repair or replacement of the car parts or accessories yourself. But in case you do avail a Bumper to Bumper cover, the insurer will cover the cost for the replacement or repair of the depreciated car parts and accessories post a mishap, which is a boon to the insured as the cover allows the policyholder to receive the complete insured amount without any deductions due to depreciation on the car parts.

    Rate of Depreciation

    The government of India have fixed rates of depreciation on car parts and accessories that need to be adhered by all the insurers. The rates of depreciation are as follows:

    • 50% on the parts that exhibit high wear and tear, such as rubber/plastic parts, batteries, tyres/tubes, etc.
    • 30% on car parts and accessories made of glass or fibreglass.
    • 0%-50% on metallic car parts or accessories (depending on the vehicle’s age).
    • 50% on the vehicle’s paint job.

    The depreciation rates for all the other car parts, (including those made of wood) are as given below:

    Vehicle’s Age Rate of Depreciation
    Until 6 months 0%
    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%

    Bumper to Bumper cover is beneficial to the following:

    • People who own expensive cars or new cars
    • Inexperienced drivers or people without a good driving record
    • Car owners who live in areas that are prone to accidents

    The following factors determine the insurance premium for Bumper to Bumper cover:

    • Age of the vehicle
    • The model and make of the vehicle
    • The residential area of the vehicle owner

    Why is Bumper to Bumper Cover Popular?

    Bumper to Bumper cover is one of the most sought out and popular add-on covers preferred by car owners in india for the following reasons:

    • Opting for the cover uncomplicates the claim settlement process for the new car owners post a mishap by covering the expenses for the replacement or repair of the depreciated car parts.
    • Opting for this cover is boon for car owners who own expensive cars as the replacement or repair cost for car parts or accessories of such cars are expensive. Having the cover relieves the car owners off such high expenses at the time of a mishap.

    Without a Bumper to Bumper Cover

    • In the event of a mishap, the insured will raise a claim request with the insurance firm who will then apply the rate of depreciation on the car parts or accessories that need to be replaced or repaired and determine the final amount to be paid.
    • The calculated difference between the market value of the new car part or accessory and the depreciated value of the same will be covered by the insured.
    • The amount corresponding to the depreciation can amount to a major part of your insured amount.

    Limitations of Bumper to Bumper Cover

    Bumper to Bumper Cover comes with certain limitations, such as:

    • Not providing coverage for cars that are more than 3 years old.
    • Not providing coverage for engine damage as a result of oil leakage or water ingression.
    • Not providing coverage for wear and tear of tyres, clutch plates, bearings, etc.
    • Not providing coverage for a commercial vehicle that is being used for private purposes and vice-versa.
    • Not providing coverage for a vehicle without a valid motor insurance
    • Not providing coverage for a vehicle that was being driven under the influence of alcohol or drugs
    • Not providing coverage if the driver didn’t hold a valid licence or was underage.
    • Not providing coverage for a vehicle which is used for illegal activities.
    • Restricted number of claims.
    • The policyholder has to pay the compulsory deductible component and/or a voluntary deductible as per the insurance agreement.

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