Zero depreciation bike insurance is one kind of add-on feature that gives all repair costs of your bike parts without deducted for depreciation. But before this discussion, let’s see what is depreciation means. So, depreciation is the process through which the value of your two-wheeler decreases over time. But repairs or replacements of rubber, plastic, fiberglass, and other components are partially covered by a typical insurance policy and the remainder of the depreciation cost must be paid by the car owner.
A two-wheeler or a car, unlike land and property, is a depreciating asset, meaning its value falls with time. Although any two-wheeler owner understands that typical wear and tear is unavoidable over time. Furthermore, with growing expenses, buying a two-wheeler has become extremely pricey. The expenses of repairs might be costly if the car is damaged as a result of an accident or a road disaster. A comprehensive bike insurance policy will protect you from unexpected automobile expenditures.
Most insurance firms provide add-on coverage in addition to package and third-party coverage when it comes to two-wheeler insurance. Nil Depreciation add-on cover for two-wheelers has been developed by insurance firms to protect you from the depreciation element when submitting a claim. Continue reading to learn more about how a zero depreciation policy would help policyholders and its benefits.
What Is Zero Depreciation Cover ?
A zero depreciation is one type of coverage that is provided by an insurance company during the claim settlement where the company paid all the repair cost of policyholder’s vehicle if the bike got damage in a road accident. A zero dep not only provide a good amount for the repair cost, but also it helps to save your money.
Applicable Depreciation Rate for Two-Wheeler Parts
The Insurance Regulatory and Development Authority (IRDAI) has established criteria on bike insurance policy for the depreciation that applied to certain 2-wheeler items. The following are the guidelines:
| Motorcycle Components | Depreciation Applicable (In percentage) |
| Rubber/ nylon/tubes and tyres/plastic parts /batteries | 50 percent |
| Glass materials/fiber | 30 percent |
| All other parts made of glass | Nil |
For all other parts, the rate of depreciation would be as per the following criteria:
| Age of the vehicle | Applicable Rate of Depreciation |
| From 0 to 6 months | N/A |
| 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 |
Assume, based on the above tables, that you have your motorcycle covered under a regular motor insurance policy and that your vehicle’s battery has to be replaced. You will be responsible for 50% of the cost of the replacement after filing a claim and having it accepted, while your insurance provider will cover the remaining 50%.
A zero depreciation add-on can not only help you to save a large amount of money on bike components maintenance but also cover the repair costs. Your insurance company will cover the whole cost of replacing your vehicle’s battery whenever you purchased this type of add-on. So, the benefit will be extended to all other components, and you will pay nearly nothing for bike parts replacement.
What Does Zero-Depreciation Insurance Cover?
Most of the insurance companies offers this add-on coverage, and this covers give protection to plastic, rubber, nylon, and fiberglass items. This add-on coverage is available for both new and used automobiles, as well as at renewal time. This zero-depreciation add-on insurance is for motorcycles with a maximum age of two years and is good for up to two claims during the policy period.
What does a Zero-Depreciation Policy not cover?
The zero depreciation policy is not applicable to the following situations.
- If the damages happened by an uninsured hazard.
- Damage to uninsured components such as bi-fuel kits, tyres, and gas kits.
- Wear and tear is inevitable.
- Mechanical failure causes damage.
Even zero-depreciation insurance policies have a one-year term, but it must be renewed annually to continue receiving benefits. If you don’t have zero-depreciation coverage, you may add it to your two-wheeler insurance policy or choose it when you renew your policy.
Conditions for obtaining Zero-Depreciation Insurance
It is critical when you thoroughly study the policy wordings and comprehend the circumstances linked with each cover. In most circumstances, a zero-depreciation policy comes with the following requirements.
- The zero-depreciation coverage is not valid in case the two-wheeler is entirely destroyed or stolen.
- This coverage is only available twice throughout the insurance period.
- The two-wheeler must be fixed in network garages that have partnered with the insurer whenever it is damaged in an accident.
Depending on the insurance, these terms may differ and if to want to learn more about the terms and circumstances of zero depreciation coverage, then contact your insurance provider.
The Advantages of a Zero-Depreciation Bike Insurance Policy
In the zero-depreciation add-on insurance, the policyholder receives the following benefits.
- You won’t have to pay any out-of-pocket charges since no depreciation costs will be levied if you file a claim.
- The majority of your claims for protected items are compensated without taking depreciation into account.
- It is not only increases the worth of your two-wheeler but also reduces your investment to nearly nothing.
You may have total peace of mind with this cover since you will not have to burn your pockets in the event of an unexpected scenario. Furthermore, because all major insurers provide this coverage, you may save a lot of time and money by getting a nil-depreciation policy and paying a little premium.
Is a Bike Owner’s Zero Depreciation Add-On Beneficial?
Although a policyholder must pay an additional premium to get the zero depreciation add-on protection, it may save them a lot of money on bike repairs and maintenance, For an example if a motorcycle’s insured stated value is Rs.70,000 and now, for an additional Rs. 250, you may acquire a zero depreciation add-on, on a comprehensive insurance policy for Rs. 1350 (assumed cost of premium) (actual cost may vary based on multiple factors) and the cost of replacing your motor part is approximately Rs.3000-5000, you would save a significant amount of money compared to the extra premium you will pay for a nil depreciation insurance.
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