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  • Zero Depreciation Cover for Bike Insurance

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    Zero Depreciation Cover for Bike Insurance

    Every machine has a depreciation value, owning a land or any other immovable property that is considered as an asset is not depreciable. Depreciation by definition means decrease in value due to its age and use. Any bike owner cannot avoid the usual and minor scratches, dents, etc. on a daily basis. Today with rise in inflation, buying a two wheeler has also become a costly affair. And if it’s been in a mishap then the repair costs, third party injuries, etc. all these things can create a huge hole in your pocket. In such cases, an insurance can be your saviour.

    Now, while buying a two-wheeler insurance, the company offers you few add-on covers. One of the cover is ‘Zero-Depreciation’. Many of us are not aware of the benefits and the meaning of this cover. We have a tendency to say ‘no’ to add-on covers as we think it is simply an added expense to increase our bill amount. But it is not true. The add-on covers are offered for its various benefits and you will be surprised to know the advantages of the same. Read on:

    What is Zero Depreciation Cover?

    A ‘‘Zero-Depreciation’’ cover gives you a full coverage for the vehicle as whole or part of the vehicle, without deductions of depreciation. The standard rate for two wheeler insurance policy is up to 40%, but with an add-on option of ‘Zero-Depreciation’ cover, you can claim for full amount. This is a huge advantage, because while calculating for compensation or repairs on accidents or otherwise, all insurers take depreciation value into consideration. That is the reason why standard plan gives you a claim amount after deducting the depreciation value.

    Difference between zero depreciation cover and comprehensive cover

    Comprehensive two wheeler insurance policy Zero-depreciation add-on policy
    The premium for comprehensive policy primarily depends on the cubic capacity and the rates are decided by the IRDAI. This is an add-on benefit cover that a bike owner can purchase along with comprehensive cover. The premium for this benefit is slightly higher.
    If the bike is covered only with the comprehensive cover, then the claim amount will be paid to you after calculating the rate of depreciation. If the bike is covered with this add-on cover, then the claim amount will be paid fully as the rate of depreciation is not considered.
    For the depreciable motor parts, the cost of coverage is only partial. Even the depreciable motor parts are also fully covered.
    The comprehensive cover can be availed for any vehicle which is not older than 15 years. The zero-depreciation cover on the other hand can be availed only for new vehicles not aged above 3 years.

    Benefits of Zero Depreciation

    • This add-on cover with the standard policy offers you full claim amount for value of the parts replaced saving the amount that was deductible for depreciation.
    • For Example; Mr. X has filed for an insurance claim for his two wheeler which has been in a mishap for Rs. 1 lakh. In a standard policy, he will be paid 30% or less by the insurance company for the damages caused after deducting the depreciation value of the bike. Had he purchased this cover, the insurer would paid him full 100% claim amount. This is a huge benefit for the policyholder.
    • Depreciation factor will not be considered for claims if you have this add-on cover.
    • You would not have to pay for repairs and damages if you opt for this cover. You would only have to pay for labor charges and other minor things from your pocket while getting the vehicle repaired.
    • It adds value to your standard policy.
    • While settling for claims for the insured parts of the vehicle, depreciation is not taken into consideration.
    • You can enjoy a tension free ride with a sense of security and peace of mind.
    • This cover can be availed by paying an extra amount or can be included in your standard premiums as this is an additional cover. The premium for this differs according to vehicle model, location and its age.
    • You can save on all the hassles by opting for nil depreciation cover. Make sure that you have the best deal, because companies offer huge discounts and benefits if you opt for additional covers.

    Rate of depreciation applicable on two wheeler parts

    If you have availed the zero-depreciation cover, then for certain parts of your bike, the following rate of depreciation is applicable:

    Rate of Depreciation Two-wheeler components
    Nil Few components made of glass that is listed in the policy.
    30%. Fiber and glass materials.
    50%. Nylon, tyres, rubber, tubes, plastic parts and batteries.

    Zero Depreciation Covers the following damages:

    • Damages caused to rubber, fiber parts, fiberglass, and nylon parts. This cover is primarily designed for bikes which are maximum of 24 months old.
    • The policyholder can be claimed only twice during the policy period.
    • This cover can be availed by both new and old two-wheelers.

    Exclusions from Zero Depreciation Cover:

    • Damages caused to normal wear and tear.
    • Disfigurement or damages caused due to mechanical work or breakdown.
    • Damages to uninsured parts like bi-fuel kit, tyres and gas kits.
    • Any physical harm caused to the vehicle due to uninsured peril.
    • If you do not have in add on cover you can opt for it at the time of renewal. The period of coverage is one year, therefore you have to renew it annually to enjoy its benefits.

    When can you avail Zero Depreciation Cover?

    When you purchase the policy, please read the terms and conditions clause carefully. The claim period and premium amount and few of the factors which are not standard according to the government, may vary from company to company. For each type of claim there will be certain conditions on how to avail the claim. And most importantly know what is not covered in this add-on purchase, because it is not standard with every company. Generally following are the instances when you can and cannot avail:

    • This benefit can be availed only twice during the policy term
    • If the bike has been in any mishap or accident, then the policyholder must get his bike repaired with the network of garages that have partnered with the insurer.
    • If the bike is completely wacked, damaged or stolen then this benefit cannot be availed.

    For damages caused due to public protests like fire or destruction of the bike, few insurers offer to cover a part of the expense in some cases. If you have further doubts, enquire with your insurance provider so there will be no confusion in the future.

    Some of the major insurance providers like Bharti AXA General, ICICI Lombard, Tata IG, Reliance and HDFC Ergo have been offering the ‘Zero-Depreciation’ cover since past two years. And majority of them allow two claims per policy period along with no-claim bonus benefit. IDRA has allowed this benefit in the market since past two years, and it’s time we make use of it. With the road conditions here, the potholes, traffic etc. make it miserable to enjoy the ride on new bike and it’s hard to save from some unforeseen damages. So the wiser thing to do is to get this add-on cover so you can ride tension free and also its pocket friendly. Contact your insurance provider today or shop online for best deals.