What is Zero Depreciation in Bike Insurance?
A bike or two wheeler gradually depreciates in monetary value over time due to factors like normal wear and tear, age etc. This process is basically known as depreciation. During the time of claim, due to the depreciation factor, people end up paying a larger amount of the overall claim from their own pocket. This is when zero depreciation cover comes to the rescue of a bike insurance policyholder.
What is Zero Depreciation in Bike Insurance
Zero depreciation bike insurance provides comprehensive and complete coverage regardless of depreciation. For example – if your bike is involved in an accident and the collision has caused extensive damage and if you have zero depreciation cover then the insurance provider will cover the full cost of the damage. Zero depreciation bike insurance is expensive compared to standard bike insurance for additional coverage.
Zero depreciation is for new bikes and cover is available between a maximum age of 2 years to 5 years. There is also a limit on the number of claims in a year which may vary from company to company. Damages due to mechanical breakdown or normal wear and tear are excluded from zero depreciation bike insurance. Zero depreciation bike insurance is best suited for people who have expensive spare parts, an area or travel route that is prone to accidents, new bikes or luxury bikes for amateur riders.
Depreciation in Bike Insurance
The cost of repair or replacement of bike’s metal, plastic, nylon, rubber and such other depreciable parts are not fully covered. The depreciated cost of such parts must be borne by the policyholder at the time of claims.
The depreciated cost that a policyholder pays varies with the material. The following table shows the percentage that a policyholder will pay in case of repair or replacement at the time of claims:
Consider a case where there is a need to replace bike’s nylon parts. Only 50% of the cost will be paid by the insurance company and the rest of the cost will be paid by the policyholder.
But…if you have a zero depreciation add-on cover, you don’t have to pay a penny for such depreciable parts.
Know the difference between a comprehensive policy and zero depreciation insurance for bike
Here’s the table that shows clearly the differences between a comprehensive policy with and without a zero depreciation add-on cover.
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Difference between a comprehensive policy with zero dep cover and without zero dep cover
Consider a bike having an IDV as Rs. 58,870. The premium for a comprehensive policy is Rs. 1,285 and comprehensive policy with a zero depreciation cover is Rs. 1,635 (i.e. just Rs. 350 extra).
without zero dep cover
The total repair cost comes up as Rs. 4,000 including repair and replacement cost of depreciable parts as Rs.800.
This is where the real value of zero depreciation add-on cover in bike insurance comes into picture. As you can see that the zero depreciation cover helps in saving money at the time of claims, because the insurance company pays the cost of depreciable parts.
The above example shows a saving of Rs.450, those figures are indicative and subject to change with respect to various factors.
This is where the real value of zero depreciation add-on cover in bike insurance comes into picture. As you can see that the zero depreciation cover helps in saving money at the time of claims, because the insurance company pays the cost of depreciable parts.
The above example shows a saving of Rs.450, those figures are indicative and subject to change with respect to various factors.
How does a policyholder of a bike insurance policy with zero dep add-on cover benefit?
The repair/replacement cost of depreciable parts are fully covered. So, out-of-pocket expenses come down to a bare minimum.
Receive complete payment of garage repair bills at the time of claim. So, there is no worry or apprehension and you experience complete peace of mind.
Should You Buy an add-on Zero Depreciation Cover?
- You should buy if you own a new and/or expensive bike.
- You should buy if your two-wheeler is not older than 2 years.
- You should buy if you are located in an accident-prone area.
- You should buy if you don’t want to end up paying hefty garage bills pertaining to the repair or replacement of depreciable bike parts at the time of claim.
- You should buy if you love your bike and wish to save money.
Zero Depreciation Cover
Here’s a list of few exclusions under a zero depreciation bike insurance cover:
- Any wear and tear of bike’s depreciable parts due to ageing is not covered.
- Damage caused by an uninsured peril.
- Damage to items that are not insured like bi-fuel kit, tyres and gas kits.
- Damage due to a mechanical breakdown.
Also, a zero-depreciation cover is available for bike age up to 2 years. And maximum 2 claims are accepted during a policy period.
To buy or not to buy a zero depreciation cover is a question that all bike owners ask themselves. However, all bike owners who love their bike and wish to save money, opt for a zero depreciation cover when buying a bike insurance policy.
Hey, but if you are still not sure and have any questions, please feel free to ask us in the comments section. We would be glad to help!
What Does Depreciation Mean?
Depreciation is a phenomenon that refers to the decrease of the value of an asset over a period of time, such as a decrease in the value of an asset each year as it is used. Just like any other asset, the value of a two wheeler also decreases with time and its use. The responsibility to bear the cost of depreciation on the two wheeler falls on to the owner by default.
Therefore, at the time of making a claim for a two wheeler insurance policy, the insurer can deduct the cost of depreciation incurred by the insured’s two-wheeler from the claim amount. This makes the policyholder get a lesser amount of compensation from the insurer. However, a policyholder can shift the burden of bearing the cost of depreciation from himself/herself to the insurance company with the help of a zero depreciation cover.
What is Zero Depreciation Bike Insurance Cover?
Zero Depreciation two wheeler insurance is also known as ‘Nil Depreciation’ and is one of a popular two-wheeler insurance add-on covers. Zero Depreciation add-on cover can be opted with a comprehensive and a standalone own-damage two-wheeler insurance policy. It provides 100% depreciation coverage for all the parts of your two-wheeler except tyres, tubes and batteries which are covered at 50%. Most Insurance companies allow 2 zero depreciation claims during the tenure of a policy, however, there are some exceptions like IFFCO Tokio General Insurance, Royal Sundaram General Insurance Company, New India Assurance Company which allow the unlimited number of zero depreciation claims during the tenure of a policy.
Zero Depreciation Bike Insurance Cover should ideally be opted by the following:
- New drivers
- New two-wheeler owners
- People living in accident-prone areas
- People who have luxury two-wheeler which has expensive parts.
Depreciation in Two Wheeler Vehicles
| Age of Vehicle | % of Depreciation |
| Not Exceeding 6 months | 5% |
| Exceeding 6 months but not exceeding 1 year | 15% |
| Exceeding 1 year but not exceeding 2 years | 20% |
| Exceeding 2 years but not exceeding 3 years | 30% |
| Exceeding 3 years but not exceeding 4 years | 40% |
| Exceeding 4 years but not exceeding 5 years | 50% |
Benefits of zero depreciation bike insurance cover
The benefits of a two-wheeler insurance policy with zero depreciation cover are highlighted below:
High claim amount
Before giving the claim amount for the repair of your two wheeler, the insurance company considers the depreciation rate for different parts of the two wheeler. Different bike parts have different depreciation rates, moreover, claim rates are also affected depending on the age of your two-wheeler.
Coverage is increased
Adding zero depreciation on cover increases the basic coverage of your two-wheeler insurance policy and reduces your costs to almost zero. By investing a small amount for add-on cover, you get a better claim amount which also increases your savings.
Repair cost without depreciation value
Any expenses arising out of repair of the insured parts of the two wheeler are borne irrespective of the value of wear and tear.
Save more money
With zero depreciation add-on cover, the premium amount goes up a bit, but, in case of an accident or mishap, no depreciation will be imposed on your bike and the claim amount will be calculated without depreciation, which helps you get more compensation. . The amount of compensation you get with this cover is usually much higher than the premium paid for this add-on, helping you save more money in the long run.
High return
The maximum claim amount that you are entitled to get for your bike is determined by the IDV of the bike insurance policy. The amount of compensation is directly affected by the rate of depreciation applied to the bike parts. So, with a zero depreciation bike insurance add-on cover, you can claim without being affected by any depreciation rate of the bike which ultimately helps you get more of your claim amount.
peace of mind
Bike insurance protects you and your bike against any damage, loss, injury, etc., which brings peace of mind. Your compensation amount is further enhanced by zero-depreciation add-on cover as it negates the rate of wear and tear applicable to various parts of your bike. Hence, riding a bike will definitely give you peace of mind knowing that you will be fully compensated for any mishap.