Zero Depreciation Bike Insurance- Everything You Need to Know

Just imagine-

You’ve recently bought your dream bike- Harley Davidson Vespa.

But did you know?

A brand new bike once has been taken out of the showroom is no more of the same value as it was inside the showroom! It’s lesser!

And your standard two wheeler insurance cover doesn’t offer an insurance coverage to the depreciated parts. Therefore, in case of a replacement of any of these vehicle parts, the replacement expenses will be on you. In this situation, a safe bet would be to go for a Zero Depreciation Cover!

What is Zero Depreciation Cover?

The actual monetary value of your two-wheeler decreases due to normal wear and tear and its age. This process is called depreciation. When a claim is made, the insurer only pay up the depreciated value of your bike. Most of the time the insured ends up paying a huge amount out of his/her pocket. Here comes the Zero Depreciation policy to your rescue that covers the entire repair cost without factoring the depreciation.

Also known as Bumper-to-Bumper cover or Nil Depreciation cover, Zero Depreciation policy is an add-on cover that you can clubbed with your basic two wheeler insurance cover.

As you already know the value of your vehicle doesn’t remain the same and gets depreciated with the age of the vehicle. Similarly, the insurer also estimates the depreciation related to certain materials such as glass, plastic, metal that make up your bike. In case of a luxury car, the maintenance cost of these parts could burn a big hole in your pocket. With a zero depreciation policy, you can curb the financial menace.

Zero Depreciation Cover Facts:

  • Zero depreciation cover comes with a cost, around 20% more than your standard two wheeler insurance cover.
  • In a standard two wheeler insurance plan, the rate of depreciation in parts ranges from 25% to 50%, which to be borne by the insured.
  • Zero depreciation cover is mostly appropriate for a brand new vehicle and is available for both two wheelers and four wheelers.
  • A regular two wheeler policy doesn’t provide coverage for fibre, plastic or glass parts. But with zero depreciation cover, these items can be covered.
  • Zero Depreciation cover doesn’t fully protect the tyres and batteries.
  • It is an important insurance product and one has to be careful while choosing a plan. Buy a plan only after considering both the pros and cons of zero depreciation cover.
  • Insurance companies in India may restrict the number of claims that can be filed under a zero depreciation plan. Therefore, it is recommended to not claim for small amounts or small damages.
  • In case the vehicle is not movable after an accident or breakdown, the towering charge may not be fully covered by a zero depreciation cover. However, some insurers offer complete coverage in this regard, while some will ask for the additional charges.
  • Remember, Zero Depreciation policy will not cover your vehicle for normal wear and tear. So, go for the extended warranty option, if possible.
  • As per the expert’s advice, as long as the cost of the zero depreciation doesn’t pinch your pocket, go for it.

The Role of Zero-Depreciation during Claim Settlement

If you pay a minute attention to the policy document, you’ll know that the depreciation value of many vehicle parts is quite huge.

For example, the Insurance Regulatory and Development Authority of India (IRDA) has ordained that:

  • On rubber, plastic parts, nylon and batteries – 50% depreciation is applied
  • On fibre glass components – 30% depreciation is applied
  • On wooden parts – depreciation is decided based o the age of the vehicle (such as 5% in the first year, 10% in the second year, and so on.)

In case you file a claim, with a standard two wheeler insurance policy, the insurance company will only reimburse the depreciated value of vehicle parts that are replaced. Here you have to compromise on the actual value of your two-wheeler. If you own a luxury bike than the costs may be more expensive.

Here’s why zero depreciation is better than a normal two wheeler insurance cover:

Parameters Zero Depreciation Standard Insurance Cover without Zero Depreciation Cover
Premium Little high Comparatively lesser
Claim Settlement Full coverage Coverage is offered based on the current market value of the bike
Repairing Expenses The insurance company will cover the maximum expenses Some amount will have to be paid by the policyholder
Age of the Vehicle Maximum up to 5 years Covers any vehicle less than 15 years old

 Who should Buy Zero Depreciation Bike Insurance Cover?

Ideally, Zero Depreciation cover is an ideal choice for the people with brand new two-wheelers or cars but mainly:

  • For those with luxury bikes
  • Who are new to driving
  • If you’re living in an accident-prone areas
  • If you have a two-wheeler with expensive spare parts
  • If small bumps or dents are your concern

Factors to Consider While Buying a Zero Depreciation Policy

You need to consider the below pointers before decide on purchasing a zero depreciation policy:

  • Cost of the Policy: This policy is little expensive as compared to the basic plan as it offers complete coverage by including the depreciated value of your vehicle.
  • Ideal Option for This cover is only appropriate to vehicles of up to five years old. If your bike is more than five years old, then you should consult your insurer or stick to a normal cover.  Again it depends upon your needs and only if your pocket allows.

Conditions Applied:

If something extra is on offer, that always comes with a cost. To enjoy the benefits of zero depreciation, you will need to pay an extra than usual. Here is why you need to be extra careful while scanning the coverage, as it may come with certain conditions:

  • To avail the complete benefit of this cover, the insured bike has to be repaired at the network garage only.
  • One can apply the nil depreciation cover only for 2 times during the policy tenure.
  • The insurer will not offer any indemnity to constructive total loss/total loss/theft claims
  • No coverage is offered for the parts that are not approved for replacement as per IRDA such as tires and tubes.

Self-research is Necessary-Consider It

Online researches have enough information about various insurance coverage available that suit the needs of your two-wheeler. Online comparison facilitates you with the plan that you can take at a competitive rate. It helps you analyse each parameter before you take the plunge.

Still not convinced?

You can call the insurers asking for the details of a plan or to send a representative to explain the same. However, the person may be aggressive or try convincing you to buy something you may not actually be interested. So, first analyse your insurance needs and buy accordingly. Whatever is the product; you should carefully read and understand the policy brochure and clauses. 

Final Word!

With the rise of inflation, it is hard to limit your expenses. But you can plan it accordingly. While there are essential expenses, by playing a little safe you can mitigate those unplanned expenses. When you can’t afford riding a damaged bike, by opting for a nil depreciation rider, you can protect your prized passion as well as your savings extensively.  This way you can secure your peace of mind, however, with a cost ofcourse.

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