What Is a Zero Depreciation Bike Insurance

It’s a common knowledge that the value of a vehicle depreciates as it ages. Under conventional insurance policies, any repair/replacement of the components is partially covered by the insurance company. The remaining depreciation cost has to be borne by the vehicle owner.

Unlike land and property whose value keeps increasing over time, a vehicle is a depreciating asset whose value decreases with time. Any two-wheeler owner knows that the normal wear and tear of the vehicle is inevitable. Furthermore, with rising costs, buying a two-wheeler has become a costly affair. If there's damage to the vehicle due to a road accident, the costs of repairs could also prove to be detrimental to the owner's finances. A comprehensive two-wheeler insurance cover could guard you against unexpected expenses linked with your vehicle.

When it comes to two-wheeler insurance, most of the insurance companies offer additional covers under the third-party coverage scheme. Insurance companies have conceived the concept of Nil/Zero Depreciation cover for two-wheelers that will protect you from the depreciation factor while filing an insurance claim. Read on to uncover how a zero depreciation can help the bike owner.

Rate Of Depreciation Applicable On Two-Wheeler Parts

Motorcycle Components	Depreciation Applicable (In percentage)
Nylon/rubber/tyres and tubes/plastic parts /batteries	50 percent
Fiber or Glass components	30 percent
Other parts made of glass	Nil

Rate of Depreciation Applicable Depending on the Age of the Vehicle

Age Of The vehicle	Applicable Rate Of Depreciation
From 0 to 6 months	NA
From 6 months to 1 year	5 percent
From 1 year to 2 years	10 percent
From 2 to 3 years	15 percent
From 3 to 4 years	25 percent
From 4 years to 5 years	35 percent
From 5 to 10 years	40 percent
Above 10 years	50 percent

What Does the Zero-Depreciation Cover Include?

This additional cover offered by most of the insurance providers extends coverage on plastic, rubber, nylon and fiberglass components. A zero-depreciation coverage can be availed for new vehicles and it can also be availed during renewal. The zero-depreciation add-on cover is designed for bikes that are 2 years old, at best and its valid for up to 2 claims during the policy term.

What isn't Covered in a Zero-Depreciation Policy?

The following circumstances are excluded from the zero depreciation policy.

• Damage due to an uninsured peril

• Damage to components that are uninsured such as bi-fuel kit, tires and gas kits

• Normal wear and tear

• Damage caused due to mechanical breakdown.

The tenure of most of the zero-depreciation covers in the market is one year and the policyholder must renew it yearly to savor benefits of the policy. If you don't have a zero-depreciation cover, you can purchase it along with your conventional two-wheeler insurance or purchase it while renewing your insurance policy when the vehicle is less than two years old.

Provisions for availing the Zero-Depreciation Cover

It is critical to go through the terms and conditions of the policy carefully and understand the requirements connected with the insurance cover. A zero-depreciation cover is applicable under the following conditions:

• If the two-wheeler is wholly damaged or stolen, the zero-depreciation cover isn't applicable.

• This cover can be availed twice during the policy tenure.

• If the damage is caused due to an accident, the bike must be repaired in the registered garages which have partnered with the insurance company

These conditions vary depending on the insurance company. You must inquire with your insurance company to learn about the terms and conditions under a zero depreciation add-on cover.

Advantages of Zero-Depreciation Insurance Plan

The policyholder can get the following benefits from a zero-depreciation add-on cover:

• Cost of depreciation is waived off when you make a claim

• Most of your claims linked with the insured components of the bike are settled without taking the vehicle's depreciation into account.

• It adds more value to the current bike insurance cover and brings down your expenses on vehicle damages almost nil.

What is the Difference Between a Comprehensive Insurance Policy and a Zero Depreciation Bike Insurance?

A comprehensive insurance policy covers the damages or losses occurred to your insured bike as well as the to a third party involved in the accident. The cost of replacing the components such as batteries, tubes, tires, plastic are covered under the zero depreciation cover.

The zero depreciation add-on cover guarantees that the depreciable components are entirely covered under the policy and the policyholder doesn't need to pay any additional amount for repair/replacement of the bike parts mentioned in the tables above.

The table exhibits the primary differences between a Comprehensive two-wheeler and a policy with the zero Depreciation add-on cover.

Point Of Comparison	Comprehensive Insurance Policy	Zero Depreciation Add-On Cover
Settlement of claims	Claims to be covered after deduction of applicable depreciation cost	Complete coverage of the claim
coverage for the cost of depreciable motor Parts	Partially covered	Entirely covered
Age of the vehicle	Insurance Coverage up to 15 years	Insurance Coverage up to 2 years
Cost of premium	Lesser than a nil/zero depreciation add-on policy	15-20% more than a comprehensive insurance policy

Is Zero Depreciation Cover Beneficial for a Bike Owner?

Although you need to pay an extra premium to avail the zero depreciation add-on cover, it could help you in saving significant cost on repairs and maintenance of the bike parts.

Let's assume that the declared insured value of a bike is Rs.70,000. If you buy a comprehensive insurance policy for Rs. 1350, you can get a zero depreciation add-on by paying an additional Rs. 250. If the replacement of your bike's component costs you around Rs.3000-5000 after damage caused due to an accident, you can save up a considerably massive amount as compared to the premium paid.

Refer to the table to understand the coverage you can receive based on the nature of bike policy that you have purchased.

Difference in the Repair Cost to be Born by a Policyholder Based on the Type of Policy

Point of Difference	Comprehensive Insurance Policy	Two-Wheeler Insurance with Zero depreciation Cover
Expenses made on repairs and replacement	4,500	4,500
Premium Paid	1,350	1,600
Compulsory deductible amount to be borne by the vehicle owner	100	100
Depreciation cost Applicable	1,125	0
Cost is borne by the insurer (Total repair cost - depreciation cost)	3,275	4,400
Cost to the vehicle owner (including premium and depreciation cost)	2,575	1,700
Total savings (Cost borne by the insurer - total investments made by the vehicle owner)	700	2,700

 

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