Zero Depreciation in Bike Insurance

Every vehicle goes through depreciation. In simple terms, depreciation is a reduction in the value of a commodity over a period of time due to wear and tear etc. This applies for your two wheeler as well. To safeguard you against the reduction in the value of your bike insurance at the time of a claim, a protection from depreciation or a zero depreciation cover is available as an add on, by paying an additional premium amount on top of your standard two wheeler insurance policy. This cover is very useful at the time of filing a claim as it does not take into account the reduction in the value of your two wheeler occurring due to depreciation. Hence, it provides you with a better claim amount on your loss and helps in savings. For example, if your bike has an accident, you will be provided with an entire claim for your loss and the depreciating value of the bike will not be included. In most cases of two wheeler insurance claims, it is generally the parts of the bike that are subject to replacement that face the impact of depreciation.

What is Zero Depreciation Bike Insurance?

Zero depreciation bike insurance is an add-on cover that ensures the depreciation value of the bike parts is not deducted from the claim amount. If your bike gets damaged following an accident, the insurance will cover the full cost of the part replacement without any depreciation deduction, ensuring you receive the maximum claim amount. Ideal for new bike owners, zero dep insurance for bike shields you from the extra costs of replacing parts as the bike ages.

When Should You Opt for a Zero Depreciation Cover?

Opting for zero depreciation cover is highly recommended for new bike owners, high-end bikes, and bikes prone to damage. It's particularly beneficial during the first few years of a bike's life when parts are more costly and depreciation rates are higher. This cover is best suited for those who want peace of mind knowing that they won't face significant out-of-pocket expenses for replacements in the unfortunate event of an accident.

Will Your Premium Increase After Availing a Zero Depreciation Cover?

Yes, choosing zero depreciation bike insurance will increase your premium amount. Since the depreciation cost is waived off, a higher premium is charged for this cover. The premium increase provides a balance for the insurer, offsetting the risk of potentially higher claim payouts. Many find it a trade-off worthwhile for the added financial protection it offers against the wear and tear of bike parts.

Standard Bike Insurance Vs Zero Depreciation Bike Insurance

Factors to Keep in Mind Before Choosing Zero Depreciation Cover

1. Age of the Vehicle: Zero depreciation cover is usually available for new or relatively new bikes, typically up to 3-5 years old. Check the eligibility criteria before opting for it.
2. Premium Cost: This cover increases the overall premium of your insurance policy. Assess whether the added benefits justify the extra cost based on your budget.
3. Coverage Limitations: Understand what parts are covered under the zero depreciation policy. While it covers most parts, certain exclusions like engine damage due to oil leakage may apply.
4. Number of Claims Allowed: Insurers often limit the number of zero depreciation claims you can file in a policy year. Confirm the allowed limit before purchasing the cover.
5. Condition of the Vehicle: If your bike is older or in poor condition, the zero depreciation cover might not provide significant benefits as depreciation already applies heavily.
6. Insurance Provider’s Terms: Different insurers have varying terms and conditions for zero depreciation covers. Compare policies to ensure you get the best deal with maximum benefits.
7. Repair Costs in Your Area: If repair costs for bike parts are high in your area, this cover can save you significant money during claim settlements.
8. Type of Bike: Zero depreciation cover is especially beneficial for high-end or premium bikes, as their parts tend to be more expensive to repair or replace.
9. Frequency of Usage: If you use your bike frequently or travel long distances, you may be at a higher risk of damages, making this add-on cover a wise choice.
10. Exclusions: Understand the exclusions, such as wear and tear due to regular use or damages outside the policy's coverage scope, to avoid surprises during claims.
11. Policy Tenure: Check if the zero depreciation cover can be renewed along with the base policy or if it needs to be purchased separately each year.

Benefits of Zero Depreciation Cover in Two-Wheeler Insurance

1. Full Claim Settlement: Covers the entire cost of replaced bike parts without considering depreciation, ensuring maximum reimbursement.
2. Reduced Out-of-Pocket Expenses: Minimizes additional expenses during claim settlement by covering the depreciation cost of parts like plastic, rubber, and metal.
3. Peace of Mind During Repairs: Covers the cost of expensive repairs or replacements, providing financial relief in case of significant damage.
4. Increases Policy Value: Enhances the standard policy coverage, offering greater financial protection against accidental damages.
5. Ideal for New Bikes: Helps maintain the value of a new two-wheeler by providing full coverage without deducting depreciation.
6. Covers a Wide Range of Parts: Includes coverage for depreciable parts such as fiber, glass, and plastic components often excluded from regular policies.
7. Protects Against Frequent Repairs: Beneficial for areas prone to accidents or heavy traffic where minor damages and repairs are common.
8. Affordable Add-On: Offered as a cost-effective add-on to a comprehensive insurance policy, making it an economical choice for enhanced protection.
9. Boosts Resale Value: Ensures the bike remains in good condition due to timely repairs, potentially increasing its resale value.
10. Essential for High-End Bikes: Ideal for expensive or premium bikes where repair costs are significantly higher, providing extensive financial coverage.

Also Read: What is PUC in Bikes & Why is It Important?

Standard Bike Insurance Vs Zero Depreciation Bike Insurance

Inclusions of Zero Depreciation Cover

1. Two wheeler depreciable parts include rubber, nylon, plastic and fiber-glass parts. The zero depreciation cover will include the cost of repair/replacement in claim settlements. 2. The add-on cover will be valid for up to 2 claims during the policy term. 3. The zero depreciation cover is specifically outlined for bike/two-wheeler with maximum age of 5 years. 4. The zero depreciation cover is available for new bikes as well on the renewal of bike insurance policies. 5. Read the policy documents carefully as this cover is available for designated two wheeler models only.

Exclusions of Zero Depreciation Cover

1. Remuneration due to uninsured peril. 2. Damage caused due to mechanical slip-up. 3. Damage caused because of common wear and tear as a result of ageing. 4. Compensation on damage of uninsured bike items like bi-fuel kit, tyres and gas kits. 5. The add-on cover does not cover the cost if the vehicle is completely damaged/lost. However, the total loss can be covered by the insurance company if the Insured Declared Value (IDV) is sufficient. Also Read: Comprehensive vs Third Party Bike Insurance

Conclusion

A standard two wheeler insurance policy is more beneficial if you add the zero depreciation cover. This gives you a worry-free claim process and does not imbalance your planned budget. Drive smart and get the best insurance features after two wheeler insurance policy comparison online.

Frequently Asked Questions

1. Can one purchase a zero depreciation cover for a third-party insurance cover? 

No, zero depreciation cover cannot be purchased with third-party insurance as it only applies to comprehensive bike insurance policies which cover both third-party liabilities and own-damage.

2. How many times can a zero depreciation claim be made? 

Insurers typically limit the number of zero depreciation claims a policyholder can make in a policy term. Allowing two claims per year is common, but this can vary, so check your policy details.

3. Should I buy a zero depreciation add-on if my bike is 6 years old? 

Purchasing a zero depreciation add-on for a bike that is 6 years old may not be cost-effective, as these covers are generally more beneficial for newer bikes.

4. Is the zero-depreciation add-on useful for a new bike owner?

Yes, the zero-depreciation add-on is highly useful for new bike owners as it ensures that depreciation is not deducted from the claim amount, making it ideal for maintaining financial protection against new parts replacement costs.

5. Is the zero-depreciation cover for bike insurance useful for an old bike owner?

Zero-depreciation cover tends to be less beneficial for older bikes, as the cost might outweigh the benefits due to higher premiums and the limited availability of such covers for older models.

6. I am buying a three-year-old secondhand bike. Should I opt for the zero-dep cover? 

Yes, opting for zero depreciation cover can be beneficial for a three-year-old bike as it will help cover the costs without the depreciation factor, especially if the bike is in good condition and the premium fits your budget.

7. Why should I choose Zero Depreciation Cover?

Zero depreciation cover ensures full claim settlement without deducting the depreciation cost of bike parts. It reduces out-of-pocket expenses and provides greater financial protection, especially for new or high-end bikes.

8. Can I add Zero Depreciation Cover at any time?

No, zero depreciation cover can typically only be added when purchasing or renewing a comprehensive bike insurance policy. It is not available as a standalone cover.

9. Can one purchase a zero depreciation cover for a third-party insurance cover?

No, zero depreciation cover is only available with a comprehensive or standalone own-damage insurance policy, not with third-party insurance.

10. Is zero depreciation policy available after 5 years?

In most cases, zero depreciation cover is available for bikes up to 5 years old. Some insurers may offer extended options for older bikes, but it depends on the policy terms.

11. Can I get zero depreciation insurance beyond 5 years for a bike?

Yes, a few insurers provide zero depreciation cover beyond 5 years, but it is rare and subject to additional inspections and higher premiums.

12. Which is better: Comprehensive or Zero Depreciation?

Comprehensive Insurance provides broad coverage, including third-party and own-damage, but deducts depreciation during claim settlements while Zero Depreciation Cover enhances comprehensive insurance by eliminating depreciation deductions, offering maximum claim reimbursement. It is better for new or high-value bikes.   *Standard T&C Apply *Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.