Difference between Comprehensive and Zero Depreciation Car Insurance
Most vehicle buyers closely observe the features of the automobile they are buying but tend to pay less attention to the type of insurance they are purchasing along with it. In most cases, the vehicle owners are likely to accept whatever type of car insurance the car dealer recommends. Whether the dealer recommends third party coverage, bumper to bumper car insurance or comprehensive car insurance many vehicle owners simply sign on the dotted lines without really understanding what they are paying for.
What is Zero Depreciation Car Insurance?
The Zero Depreciation Car Insurance policy also often referred to as bumper to bumper car insurance. Whereas a basic or third party policy covers damage to the third party or their vehicle in case of an accident, bumper to bumper insurance offers coverage to your vehicle as well. Unlike other types of auto insurance, this type of insurance covers the external parts of your vehicle as well such as the metal body, plastic and other fittings and specified accessories. In other words your vehicle is protected from the front bumper to the rear bumper (usually including airbags). This sort of insurance is also called zero dep (depreciation) insurance because the insurance company is bound to bear 100% of the costs. In other words 0% is borne by you, the policyholder.
Experts recommend this type of insurance for high end or luxury cars with expensive parts. This type of insurance also makes sense for less experienced vehicle owners or drivers who are more likely to get into accidents. If the vehicle is more likely to be driven along bad roads or areas where accidents occur frequently, bumper to bumper policies are a good idea.
When you compare car insurance you find that bumper to bumper insurance has certain limitations. It is usually offered only on new cars and that may be offered only for a specified number of years after purchase (usually five). There is also a restriction on the number of claims that a policyholder can make during the insurance term (usually two). Bumper to bumper car insurance may not cover the internal faults of the engine, or damage to internal parts (brakes, clutch plates etc) due to regular wear and tear. One more thing to remember is that this type of insurance costs more than other types of auto insurance. Hence, for cars of modest value or older cars, this type of insurance does not make economic sense.
What is Comprehensive Car Insurance?
A comprehensive policy offers coverage for eventualities such as glass damage, arson or vandalism, natural disasters, riot damage etc, and also offers third party coverage. Comprehensive insurance also covers theft and damage caused by third parties. However, when you do an actual car insurance comparison by looking at terms and inclusions as set out in the contract, you realize that your so called ‘comprehensive’ policy may not really cover every one of all the possible eventualities. In the event the policyholder may need to buy additional coverage in the form of medical claim, engine protector, collision insurance, and/or zero dep riders.
Similarities and difference between comprehensive and zero depreciation insurance
While bumper to bumper policies cover 100% of the claim value, comprehensive policies will pay for only a certain percentage of the expenses. For instance, some comprehensive plans will pay only 50% of expenses incurred for plastic parts damage or airbag deployment. The advantage of comprehensive insurance however is that the policy can be extended for up to 15 years, whereas a bumper to bumper policy will not be renewed for vehicles older than a specified number of years.
There are also some commonalities between bumper to bumper car insurance and comprehensive car insurance. Doing car insurance comparison you find that both types of insurance offer protection against theft up to 100% of the IDV (insured declared value) of the vehicle. Both types of insurance will also pay 100% for labour costs as well as glass parts in case of repairs.
As a vehicle owner, you should make your choice between bumper to bumper car insurance or comprehensive car insurance based on your driving habits, frequency of usage and area of operation. Also, take into account your personal skill and driving record. Compare policies, read the terms and pay only for the type of protection you need.