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All You need to know about Zero Depreciation Insurance for Two Wheeler

A vehicle is a depreciating asset. And the cost of depreciation directly affects the claim settlement amount at the time of two wheeler insurance claim. The value of a two-wheeler is depreciated by 20% as soon as it leaves the showroom. And with each year it depreciates even more.

What is Zero-Depreciation Insurance in Two Wheeler?

Basically, zero depreciation means comprehensive coverage to the two-wheeler without taking into consideration its depreciation value. If any damage is caused to your two-wheeler after a collision, and you lodge a claim, then your insurer will offer your compensation the current market value without deducting the deprecation. 

For example, if you lodge a bike insurance claim of INR 10,000 for a 2-year-old bike, then your compensation amount will be around INR 6500. That is why it is suggested that you get nil-depreciation cover as an add-on benefit.

How to Calculate Depreciation on a Bike?

If you are thinking that by purchasing a comprehensive 2-wheeler insurance policy you will not have to pay anything from your pocket, well, in that case, you are mistaken. All the two-wheeler insurance claims are settled after deploying a formula to calculate the premium amount.

Insurers always deduct the depreciation value of the parts and you might have to shell out a portion of the overall costs. It is easy to know the cost of the premium amount by using an online bike insurance premium calculator.

Depreciation Schedule of Two-Wheeler is as follows:

Vehicle’ Age

Percentage of Depreciation for fixing Insured Declared Value of the Bike

Up to 6 months

5 percent

B/w 6 months and 1 year

15 percent

B/w 1 year and 2 years

20 percent

B/w 2 years and 3 years

30 percent

B/w 3 years and 4 years

40 percent

B/w 4 years and 5 years

50 percent

Remember, that you can only buy zero depreciation cover in a comprehensive bike insurance policy, as this benefit is not available in a third-party bike insurance policy.

Why Buy Zero-Depreciation Bike insurance?

If your bike is new, a zero depreciation policy is recommended for you. Also, amateur bike drivers or superbike owners should definitely buy a zero depreciation two-wheeler policy.

One cannot predict road mishaps or damages, therefore, zero depreciation seems to be a viable option even it means an additional cost of the premium. It is convenient to buy a bike insurance policy online and opt for zero depreciation add-on benefit.

The policyholder needs to bear the cost of replacement or repair of bike's metal, nylon, plastic; rubber and other parts at the time of filing a claim.

The cost of depreciation varies with the material. The table below shows the depreciation that is applicable to different parts of the vehicle at the time of filing a claim:

Bike Parts

Cost Of Depreciation (% of Total Cost)

Glass

0

Fiberglass

30

Nylon,  Rubber, and Plastic

50

Tubes and Tyres

50

So, in case there is an accident and you need to repair or replace your two-wheelers nylon parts then you will only need to pay 50% of the repair cost and the rest will be paid by the insurer. But if you have zero depreciation cover then you will not have to pay anything from your own pocket.

What is the Advantage of Zero-Depreciation Bike Insurance?

Certainly, a zero depreciation policy is more beneficial than a basic bike insurance policy. But every good thing comes with a price.

To reiterate, a bike insurance policy with zero depreciation benefit will cost 15 percent extra than a basic bike insurance policy. It means that if you are paying the extra premium annually to cover up for a higher cost that may arise at the time of an accident/damage/theft.  It is an advance payment to ward off the future cost.

Those who are looking for a cheaper bike insurance policy may not opt for this cover. Whereas, people who want to enjoy their peace of mind would opt for zero depreciation cover with their comprehensive bike insurance policy.

But there are some insurance companies that may restrict the number of claims that are permissible in a year. This is to limit the number of people lodging claims for small damages.

Besides, you are eligible to get zero depreciation cover for bikes that are not more than 2 years old.

Why Zero-Depreciation is Better than a Comprehensive Policy?

In a basic comprehensive bike insurance policy, you will get compensation after deducting the depreciation value and the calculation will be based on the current market value of the Bike. Two wheeler’s depreciation would vary from 0% to 40% and if you have a zero depreciation plan, then you can get the full claim amount.

In short, if you file an accidental damage claim, a comprehensive bike insurance policy will pay off the amount after deducting the depreciation value. On the other hand, if you have zero depreciation cover then your insurance provider will recompense the full amount for the irrespective of the depreciation of the parts.

What is not Covered by Zero-Depreciation Insurance for Two-wheelers?

  • Compensation for any expense that is beyond the scope of coverage
  • Any loss or damage that has incurred due to mechanical slip-ups
  • Routine wear and tear
  • Uninsured bike items like tires, bi-fuel kit, and gas kits
  • If the bike is declared as a total loss

Here’s why Zero-Depreciation Cover makes a Viable Option-

  • The full claim settlement amount and irrespective of the depreciation value. And the claim amount of a standard bike insurance policy will be based on the current market value and the depreciation value of the parts would make a huge difference.
  • In comparison to the basic policy, the premium is on a higher side but at the time of claim, it saves you from huge expenses at the time of claim.
  • A zero depreciation bike insurance policy saves you from the cost of repairs and plastic fiber parts. So it means that if you buy a comprehensive bike insurance policy with zero depreciation benefit and you file an own damage claim, in that case, you will be entitled to get the entire cost of damage repair.
  • A basic bike insurance policy will cover older bikes also. But a zero depreciation policy is only valid for bikes up to a specified age.
  • For basic bikes, a standard two-wheeler plan would suffice. But for sports bikes, it is suggested that you get a zero depreciation cover to avoid the huge cost of repair of expensive spare parts.

Therefore, zero depreciation cover is recommended for all the superbike owners, new drivers, people who own a bike with expensive spare parts and are living in accidental-prone areas.

Conclusion

A basic bike insurance policy would offer complete protection if you add zero deprecation rider benefit. You can enjoy a seamless claim process and would also not hamper your entire budget. While you drive across the city roads, you know that you and your vehicle are secured with an adequate two-wheeler insurance policy with zero depreciation cover.

Zero Depreciation Bike Insurance FAQs

Q1. What are the advantages of zero depreciation cover in a bike insurance policy?

Ans: A zero depreciation bike insurance policy offers you the following benefits-

  • It reduces the expenses that you need to pay from your pocket at the time of claim
  • Despite the deductibles, you can get the actual claim amount
  • You can enjoy enhanced policy coverage
  • You can save more money

Q2. What is covered under a bike insurance policy with zero depreciation cover?

Ans: Zero depreciation policy covers the following expenses:

  • Cost of depreciable bike parts such as rubber, nylon, plastic parts, and fiberglass
  • The cost of repair and replacement of bike’s parts at the time of claim settlement
  • Coverage is also provided to partial damages that are caused to tires and battery without calculating the depreciation
  • The zero depreciation cover can be availed at the time of renewal and purchase both
  • The number of claims that are permitted in a zero depreciation policy varies from one insurance provider to another

Q3. What is not covered under a zero depreciation bike insurance policy?

Ans: Most of the bike insurance policies do not cover:

  • Wear and tear of the bike parts
  • Uninsured perils are also not covered
  • Total loss or damage caused to the bike
  • Any damage resulting due to mechanical faults
  • Damage caused to bi-fuel kits etc. are usually not covered

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