A minor dent or scratch used to mean a quick visit to the local mechanic and a small repair bill. However, with modern cars becoming more advanced, even minor damage can lead to unexpectedly high repair costs. Features such as parking sensors, rear-view cameras, advanced driver assistance systems, and electronic components have made vehicles safer and more convenient, but they have also increased the complexity of repairs. As a result, replacing or repairing a seemingly small damaged part may require specialised equipment, skilled technicians, and additional calibration work.
This is making car owners rethink their approach to car insurance. Coverage that once seemed like an additional expense is now becoming an important financial safeguard, particularly as the cost of spare parts and labour continues to rise. Even though the GST reduction on many car spare parts can provide some relief, it may not be enough to offset the overall cost of repairing modern vehicles. Understanding why repair expenses have increased, how insurance claims are settled, and which add-ons are available can help you choose the right car insurance policy and avoid unexpected out-of-pocket expenses when your vehicle needs repairs.
Why car repair bills keep climbing despite the GST cut
From 22nd September 2025, the GST on most car spare parts has been reduced from 28% to 18%. This means a lower tax for many common parts, which could help reduce your repair bills. That said, the tax is just one part of the total cost. Modern cars come with advanced systems, which can make repairs more complex and expensive.
For example:
– A bumper now might have parking sensors or radar for driver assistance.
– Windscreens may have cameras that need recalibration after being replaced.
– Headlamps are often sealed LED units that require complete assembly replacement.
– Body panels in many cars are designed around electronic components.
What once involved simply straightening a panel might now mean replacing electronics or recalibrating systems. While the lower GST helps, it doesn’t fully cover the additional costs of these modern repairs.
How depreciation deductions grow with the repair bill
When a part is replaced under a standard policy, the insurer deducts depreciation before paying the claim. How much is deducted depends on what the part is made of and how old the car is.
| Part Being Replaced | Depreciation Usually Deducted |
|---|---|
| Plastic, Rubber and Nylon Parts, Tyres, Batteries and Airbags | 50% |
| Fibreglass Parts | 30% |
| Glass | Nil |
| Metal Parts, Car Under Six Months Old | Nil |
| Metal Parts, Car Three to Four Years Old | 25% |
| Metal Parts, Car Five to Ten Years Old | 40% |
The higher the price of the part, the more the deduction. For example, if the bumper or lamp assembly is expensive, a bigger amount will be deducted from your claim, even if it’s covered under the policy terms.
Older cars are also affected differently by rising repair costs. If fixing your car costs more than 75% of its insured declared value (IDV), it’s treated as a total loss. Since repair costs keep increasing, older cars reach this limit faster. In that case, the payout will be based on the IDV.
Why comprehensive car insurance matters more now
Third-party car insurance is mandatory. It covers damages or losses you may cause to others, but it doesn’t cover repairs for your own car. Earlier, when repair costs were low, some car owners were okay taking that risk themselves. But now, with rising repair charges, that choice doesn’t seem practical.
Comprehensive car insurance is a better option. It includes third-party cover and also protects your car from things like accidents, theft, fire, floods, and storms. Many owners of new cars prefer to buy a three-year third-party policy and then purchase own damage cover separately each year. This way, their car stays protected.
Add-ons that respond to higher repair costs
Several add-ons deal directly with the way repair bills have grown.
Zero depreciation cover removes the depreciation deduction on a covered claim, which matters more as parts get costlier. It applies to a set number of claims each year and is generally offered on cars up to about five years old.
Consumables cover pays for items such as engine oil, oil filter, brake oil, nuts and bolts, which a standard policy may not include.
Engine protection covers engine, gearbox and differential parts damaged by water getting in, which a standard policy treats as a knock-on loss and leaves out.
Which mix fits depends on how new the car is and where it is driven. A newer car used in heavy city traffic may make zero depreciation cover relevant, while a car parked in a flood-prone area may make engine protection worth considering.
What to look at when buying car insurance online
Buying car insurance online makes it easy to compare options and a few points are worth comparing alongside the premium.
The IDV: A lower IDV can reduce the premium, but it can also reduce the amount payable if the car is written off or stolen, subject to the policy terms.
The cashless garage network near you: A cashless repair can reduce the need to pay the full repair bill upfront, subject to the insurer’s cashless facility and applicable terms.
The add-on price beside the cover it provides: A slightly higher premium with relevant add-ons may help cover repair costs that are otherwise excluded or subject to deductions.
The voluntary deductible: A higher deductible can lower the premium, but you agree to bear a larger portion of the claim amount when you make a claim.
Leading insurers in India like Zurich Kotak General Insurance Company (India) Limited, show these details alongside the quote before you pay. Comparing car insurance online on these points gives a fuller picture than the headline premium alone.
Also Read: Using Fixed Income Funds For Capital Protection
Conclusion
Rising car repair costs have made choosing the right insurance policy more important than ever. Although the GST reduction on many car spare parts can offer some relief, modern vehicle technology, expensive components, and repair-related depreciation deductions can still increase your out-of-pocket expenses.
Before renewing your policy, review your car’s Insured Declared Value (IDV), depreciation coverage, deductibles, cashless garage network, and available add-ons. Options such as zero depreciation, consumables cover, and engine protection may provide additional financial support, depending on your vehicle and driving conditions.
Rather than choosing a policy based on the lowest premium alone, compare the coverage, exclusions, and claim conditions carefully. The right car insurance policy can help you manage unexpected repair expenses and protect your finances when your vehicle needs repairs.
Frequently Asked Questions (FAQs)
1. Why are car repair costs increasing in India?
Car repair costs are rising partly because modern vehicles use advanced electronics, parking sensors, cameras, radar systems, and LED lighting. These components can require expensive replacements and specialised calibration, increasing the overall repair bill.
2. Has the GST reduction made car repairs cheaper?
The GST reduction on many car spare parts from 28% to 18%, effective 22 September 2025, can help reduce the tax component of repair costs. However, the final bill may still be high because of labour charges, electronic components, replacement parts, and calibration expenses.
3. What is zero depreciation car insurance?
Zero depreciation cover is an add-on that reduces or eliminates depreciation deductions on eligible replaced parts when settling a covered claim, subject to policy terms and exclusions. It can help reduce out-of-pocket expenses, particularly when repairing newer cars with expensive components.
4. Does comprehensive car insurance cover all car repair costs?
No. Comprehensive car insurance generally covers third-party liabilities and specified damage to your own vehicle, subject to the policy terms. Depreciation, deductibles, consumables, mechanical breakdowns, and certain other expenses may not be covered unless the relevant add-on or protection applies.
5. What is the difference between third-party and comprehensive car insurance?
Third-party insurance covers eligible legal liabilities for injury, death, or property damage caused to others. Comprehensive car insurance includes third-party liability cover and protection against specified damage to your own vehicle, such as damage caused by accidents, fire, theft, or natural disasters, subject to the policy terms.
6. What is IDV in car insurance, and why is it important?
IDV, or Insured Declared Value, represents the insured value of your car for certain claims, particularly total loss and theft claims, subject to policy conditions. A lower IDV may reduce your premium, but it can also reduce the potential payout for these claims.
7. Which car insurance add-ons are useful when repair costs are high?
The most relevant options may include:
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Zero depreciation cover: Helps reduce depreciation deductions on eligible claims.
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Consumables cover: Covers specified consumable items that may be excluded under the standard policy.
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Engine protection: May cover specified engine or gearbox damage, including eligible water-ingress damage, subject to exclusions.
The best combination depends on your car’s age, location, usage, and the terms offered by your insurer.
8. What should I compare when buying car insurance online?
Compare more than just the premium. Check the IDV, claim settlement conditions, cashless garage network, deductibles, exclusions, add-on benefits, and limits on the number of claims. These details can help you understand the actual protection offered by a policy.
9. Is zero depreciation cover worth buying for an older car?
It depends on the car’s age, value, repair costs, and the insurer’s eligibility rules. Zero depreciation cover is often more useful for newer vehicles, but some insurers may offer it for older cars under specific conditions. Check the eligibility, additional premium, and claim limits before purchasing.
10. How can I reduce my out-of-pocket car repair expenses?
Choose appropriate insurance coverage, consider relevant add-ons, review your IDV, and check the insurer’s cashless garage network. Also, understand your compulsory and voluntary deductibles and the exclusions that may leave certain repair expenses payable by you.