Zero Depreciation Cover for Two-Wheeler Insurance

There are certain guidelines set by the Insurance Regulatory and Development Authority (IRDA) with respect to the depreciation to be applied on different 2-wheeler parts. These guidelines are as follows:

For all other parts, the rate of depreciation would be as per the following criteria:

Now based on the above tables, suppose you have got your bike insured with a standard motor insurance policy and the battery of your vehicle needs a replacement. After you make a claim for the same and it is duly approved, you will be required to bear the 50% cost of the replacement while your insurance provider will provide for the the remaining 50% of the cost.

A zero depreciation add-on can be instrumental in saving significant amount of cost on replacement and repair of your bike parts. With this add-on, your insurance provider will pay the 100% cost incurred in the replacement of the battery of your vehicle. The benefit will extend to all other parts and you will have to spend almost nothing on the replacement of your bike parts.

What Does the Zero-Depreciation Cover Include?

This add-on cover provided by most of the insurance companies offers coverage on plastic, rubber, nylon and fiberglass parts. This add-on cover can be availed for brand new vehicles and also can be opted for at the time of renewal. This zero-depreciation add-on cover is designed for bikes with a maximum age of up to 2 years and is valid for up to 2 claims during the period of the policy.

The other inclusions are given below: 

1. Recompense for wear-and-tear components made of nylon, rubber, fibreglass, and plastic.  

1. Payment for replacement and repair expenses at the time the claim is settled 

1. Certain policies additionally provide coverage for partial damage to tires and batteries without factoring in depreciation.  

1. You can take advantage of the zero-depreciation coverage both at the initial purchase and renewal.  

1. Depending on the insurance provider, there may be restrictions on how many claims are allowed under two-wheeler insurance zero dep.  

1. Carefully read the policy materials, as only specific two-wheeler models are eligible for 0% depreciation without excess. 

What is Not Covered in a Zero-Depreciation Policy?

The following conditions are excluded from the zero depreciation policy.

1. Damage due to an uninsured peril.
2. Damage to items that are uninsured like bi-fuel kit, tyres and gas kits.
3. Normal wear and tear.
4. Damage due to mechanical breakdown.

The tenure of most zero-depreciation covers in the market is one year and the policyholder must renew it annually to enjoy the benefits. If you do not have a zero-depreciation cover, you can buy it along with the two-wheeler insurance or opt for it while renewing your policy.

What are the Conditions to Avail Zero Depreciation Add-On Cover?

The following are the conditions to avail zero depreciation add-on cover: 

1. Zero depreciation add-on cover is not applicable, in case your two-wheeler is completely damaged or stolen 
2. During the whole policy duration, the add-on cover can be availed only twice by the policyholder 
3. Two-wheeler should be sent only to any of the network garage for repair in case of accidental damage to avail the zero depreciation add-on cover 
4. The person with the pricey or brand-new bike  

1. If the two-wheeler you own is no more than two years old  

1. When someone is in a region that is prone to accidents or has high traffic  

1. If, at the time of claim, the individual refuses to pay any money for repairs or replacements 

Benefits of Zero-Depreciation Insurance Plan

The following are some of the benefits of a Zero-depreciation Insurance Plan: 

1. High Coverage: Adding zero depreciation add-on cover to the two-wheeler insurance not only enhances your savings but also increases coverage by reducing the expenses to zero. 
2. Repair Cost Provided without Depreciated Value: Insurance holders will also be benefited regarding the repair cost of the two-wheeler, as the zero-depreciation add-on cover manages the expenses related to repair of the vehicle without considering the depreciated value. 
3. Increased Claim Amount: Adding zero depreciation add-on to the two wheeler insurance will increase the claim amount as the depreciation value of the bike and other parts will not be deducted. 
4. Increased Compensation : The compensation amount is directly influenced by the depreciation value and therefore, buying zero depreciation bike insurance add-on cover helps you get high amount of claim without being impacted by the depreciation value of the bike or any of its parts. 
5. Increased Savings: Though premium amount gets increased by adding the zero-depreciation add-on cover to the bike insurance, it increases the compensation amount without adding any depreciation value, which increases your savings. 
6. Reduces Stress: Zero depreciation add-on cover with a bike insurance policy ensures that you get full compensation without depreciation applicable on part of the bike reduces stress of mishap and related expenses due to damage and injury. 

What is the Difference Between a Zero Depreciation Bike Insurance and a Comprehensive Insurance Policy?

A comprehensive motor insurance policy covers the cost of damage or losses occurred to your insured vehicle as well as the damage caused to a third party in an accident. The cost of replacement of motor parts such as batteries, tyres and tubes, plastic and rubber components, fibre, nylon and glass materials are not fully provided for in a comprehensive insurance policy.

The zero depreciation add-on cover ensures that the depreciable parts are fully covered under the policy and the policyholder does not have to pay any extra amount for the repair or replacement of the bike parts mentioned in the above tables.

The following table shows the main differences between a Comprehensive two-wheeler insurance policy and a policy with the Nil Depreciation add-on cover.

Let's Try to Understand the Same with an Example

Rohan and Rahul each bought a new bike. Both the bikes were of the same brand and model and costed Rs.1 lakh. While Rohan bought a comprehensive motorcycle insurance policy for his bike, Rahul also bought a zero depreciation add-on cover.

For an instance, if both of them meet with an accident and need to get the same parts of their bikes to be replaced, they both will get a different amount covered by their insurance providers. While Rohan will have to pay the depreciated value of the bike parts from his own pocket and recover the rest from his insurance provider, Rahul will be entitled to receive the entire amount incurred in the replacement of motor parts as he opted for a zero-depreciation bike insurance policy.

How to Purchase Zero Depreciation Bike Insurance Cover?

Purchasing zero depreciation two-wheeler insurance cover is simple and easy. It can be purchased only along with your two-wheeler insurance either while buying new policy or during renewal. 

Is Zero Depreciation Add-on Useful for a Bike Owner?

Although a policyholder needs to pay extra premium to avail the zero depreciation add-on cover, it can help them save significant cost on the repairs and maintenance of their bike parts. Supposingly, the insured declared value of a motorcycle is Rs.70,000. Now if you buy a comprehensive insurance policy for Rs. 1350 (assumed cost of premium), you can get a zero depreciation add-on by spending an extra amount of Rs. 250 (actual cost may vary based on multiple factors). Now if the replacement of your motor part costs you around Rs.3000-5000, you get to save a considerably high cost in comparison to the extra premium you pay for a nil depreciation cover.

Consider the following table to understand the coverage you will receive based on the type of two-wheeler policy you have bought. Assuming the total cost of repair is Rs.5000 including replacement of various bike components, here is an example to show how the compensation will vary if you have a comprehensive 2-wheeler insurance policy or a zero-depreciation bike insurance policy.

Difference in the Repair Cost to be born by a policyholder based on the type of policy:

As you can see in the above table, the premium paid on the comprehensive insurance policy is lower than that of the zero depreciation motor insurance policy. However, due to depreciation, the total cost to be borne by the vehicle owner comes to around 2,575 and they only save Rs.700 in the total repair cost. Whereas, in the zero depreciation cover where depreciation charges are not applied, the overall cost borne by the 2-wheeler owner comes down to Rs.1700, helping them save Rs.2700 on the overall repair cost.

The above table gives a clear idea on how a zero-depreciation add-on cover for bike can help you save significant cost on the repair and replacement of your vehicle parts.

For all other parts, the rate of depreciation would be as per the following criteria:

Now based on the above tables, suppose you have got your bike insured with a standard motor insurance policy and the battery of your vehicle needs a replacement. After you make a claim for the same and it is duly approved, you will be required to bear the 50% cost of the replacement while your insurance provider will provide for the the remaining 50% of the cost.

A zero depreciation add-on can be instrumental in saving significant amount of cost on replacement and repair of your bike parts. With this add-on, your insurance provider will pay the 100% cost incurred in the replacement of the battery of your vehicle. The benefit will extend to all other parts and you will have to spend almost nothing on the replacement of your bike parts.

Difference Between Two-Wheeler Insurance With and Without Zero Depreciation Cover

The following is the list of differences between two-wheeler insurance with and without zero depreciation cover: 

What is the Cost of a Zero Depreciation Cover?

The cost of a zero depreciation add-on cover is 15% times the bike insurance premium. Though it costs a lot, it provides high compensation which is higher than the premium amount.