Understanding Depreciation in Bike Insurance Cover?
Depreciation is the reduction in the value of your vehicle over time. Due to this, the cost of the depreciable parts in your bike is not entirely covered. As per the IRDAI, your insurance provider bears a partial amount for the cost of repair or replacement of such depreciable parts during any mishap.
Rest of the amount has to be borne by you. Some depreciable bike parts are fiber, plastic, nylon, tube, tyres, etc. Also, the deducted depreciation value of these parts varies from one another.
Deducted Depreciation Percentage of Bike Parts
The deducted depreciation value of your bike parts varies. we have given a table below, showing you the borne percentage for you-
|Depreciable Parts of Your Bike||Deducted Depreciation Percentage|
|Rubber, nylon, and plastic parts of the bike||50%|
|Tubes and tyres of the bike||50%|
For instance, your bike meets with an accident, and the fiber parts of your bike are damaged. In such conditions, 30% of the expenses in replacement will be borne by your insurance company, and the remaining will be paid by you.
Also, the depreciation rate depends upon the age of the bike's part. Below we have another table which will help you in understanding this-
|Vehicles age||Depreciated percentage|
|Not more than 6 months||Nil|
|Between 6 months-a year||5%|
|Between 1 year-2 years||10%|
|Between 2 years-3 years||15%|
|Between 3 years-4 years||25%|
|Between 4 years-5 years||35%|
|Between 5 years-10 years||40%|
|More than 10 years||50%|
However, having a bike insurance add-on cover means you don't have to pay any amount from your pocket. The add-on cover is known as zero depreciation cover. Also, make sure you have a comprehensive bike insurance policy to buy this cover.
What is Zero Depreciation Bike Insurance Add-on Cover?
A zero-depreciation add-on cover is extra coverage that you can buy with your comprehensive bike insurance policy to save yourself from paying the percentage deductible amount from your pocket.
Generally, your insurance company decreases the value of a bike part while settling a claim. Therefore, to overlook this depreciation, a zero-depreciation add-on cover can be purchased with your bike insurance policy.
Difference Between the Comprehensive Bike Insurance and Zero-depreciation Bike Insurance Add-on Cover
Having a comprehensive bike insurance policy means you will be covered for your own damages and third-party liability in case of any road mishap. Remember, the cost of replacement or repairing your depreciable bike parts like fiber-glass, rubber, nylon, plastic parts, etc. are not entirely covered under this policy.
On the other hand, having a zero-depreciation bike insurance add-on cover gives you extra coverage, and you don't have to pay for the depreciable parts during the claim settlement.
To make you understand better, we have given a table below showing the difference between comprehensive bike insurance and zero-depreciation bike insurance add-on cover-
|Points of Basis||Comprehensive Bike Insurance Policy||Zero-depreciation Add-on Cover|
|Claim Settlement Process||Depreciated deduction in percentage for different bike parts||Full pay out for the parts by the insurer|
|Bike Parts Depreciable Cost||Not fully covered, a certain amount will be paid by the policyholder||Fully covered|
|Bike Age Suitability||Up to 15 years of age||Up to 2 years of age|
|Premium Amount||The premium is lesser than the zero-depreciation cover.||The premium is 15-20% higher as it will give entire coverage.|
|Claim Amount||Limited up to depreciated value||Full payment to the garage bill|
Benefits of Having Zero-depreciation Add-on Cover
One of the biggest advantages of having this bike insurance add-on cover is that all the depreciable parts are covered entirely under this. Therefore, you do not have to pay the percentage deductibles. Also, having this cover gives peace of mind because you get full payment of garage bill repairs during the claim.
Exclusions of Zero-depreciation Add-on Cover
Every insurance policy does have exclusions as well. Below we have mentioned some of the exclusions of this add-on cover also-
1. You can raise a maximum of 2 claims under this cover.
2. The usual wear and tear of bike parts that need any kind of repairing/replacement are not covered.
3. This cover is applicable up to 2 years of bikes age.
4. You cannot avail benefits of this cover in case of a total loss of the bike, theft, or constructive total loss.
5. Your insurer will accept only own-damage claims.
Who Should Buy Zero-depreciation Add-on Cover?
This is an affordable cover that saves a lot of repairing or replacement costs. Usually, it is ideal for the one who has newly purchased a bike or who has a sports bike.
You can also buy this cover if your bike is not older than two years. It is also suitable for bikers who live in an accident-prone area or drive to a heavily trafficked area. Last but not the least, if you are a person who doesn't want to waste their money, time, and efforts in the settlement process should buy this.
Your fiber parts of a bike are covered under your comprehensive bike insurance policy but with the help of zero-depreciation bike insurance add-on covers you get full coverage for this part, and you do not have to pay from your pocket. So, choose your policy and the bike insurance add-on covers wisely.
Two Wheeler insurance articles
03 Nov 2023Bike insurance is an essential financial safety net in case of
03 Nov 2023Among all the bike insurance add-ons available in the market
25 Oct 2023When claiming on your bike insurance policy, you always look for
17 Oct 2023Tropical cyclones are prevalent, causing a huge loss of human
13 Oct 2023For two-wheeler owners, adequate coverage is crucial to keep