If you’re in the market for an automobile, it’s possible that you’ve heard of Zero Depreciation Insurance (ZDI). It’s fairly standard in the industry, and an easy way to protect your investment in your car during the time that you have it. But what exactly is ZDI? And how does it work? This article will explain ZDI to you so that you can determine if it’s something that you want to invest in.
The Need For ZDI
If you own a vehicle for any substantial amount of time, it’s likely that it’s depreciating at a pretty rapid rate. The average car loses 15% of its value in just one year! For some used cars, that depreciation rate is even higher—especially if they have a lot of miles on them. As long as you drive your car in accordance with normal use, you should be able to deduct all but $3,000 or so from your taxable income each year for auto use. Zero Depreciation insurance takes away that deduction entirely.
The Features of Zero Depreciation Insurance
Just as its name suggests, Zero Depreciation Insurance covers your assets for exactly zero dollars in depreciation. This means that if your asset’s value goes down after you purchase it but before it is replaced by a new one, you won’t have to pay any money to get your new equipment or machinery. Zero Depreciation Insurance also protects your assets from any wear and tear or incidental damage they might receive while they are still in working condition. In other words, if anything happens to a machine before it is due for replacement—an unexpected expense—you will not be required to pay out of pocket for repairs.
How To Buy Zero Depreciation Cover?
If you are buying a new car, it is possible to buy ‘zero depreciation cover’ as part of your purchase. This additional insurance protects against any drop in value. The cost of zero depreciation varies between dealerships and will usually be an extra one or two hundred pounds. If you have taken out a hire purchase on your vehicle, it may also be worth paying extra for zero depreciation cover when taking out your loan. Speak to your bank or finance provider about zero depreciation options. In many cases, if you pay for extended warranty coverage for your car in excess of one year then you will also get some zero depreciation protection included in that policy too. There are also standalone policies available if no other insurance or finance provider is covering you fully.
How To Claim On Zero Depreciation Cover
To use zero depreciation insurance on your asset you will need to take a few steps. Firstly determine what your asset is worth by getting an independent valuation of it. Secondly, ensure that you have enough cash in your super fund to pay for at least 25% of its replacement cost should it be destroyed or stolen. Thirdly, make sure that you keep a record of all assets with their valuations and receipts for any expenses associated with them (such as repairs or improvement) and store them in one place for ease of reference.
What is covered under ZD Insurance?
Zero depreciation insurance covers vehicles that are new and have a clean title (no outstanding loan balance), are driven less than 5,000 miles per year, and are kept in a garage or shed. The policy also has no mileage restrictions. The coverage applies to all types of vehicles including luxury cars such as Lamborghinis and Aston Martins, exotic cars such as Ferraris and Bentleys, and classic cars such as Cadillacs or Porsches. Other eligible models include BMWs, Maserati’s, Mercedes Benzes, and much more. Eligible models from each manufacturer range from about $15,000-$100K+. Vehicles must be owned by an individual person or family for their own use with zero intent to resell.
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