Every bike owner knows that it is compulsory to purchase bike insurance as per the law. But if you own a bike and are unaware of zero depreciation bike insurance coverage, you could be missing out on a product that might be very beneficial to you.
First, let's consider the key term here - depreciation. In this context, depreciation indicates the loss in the value of your bike as you use it. This overall decrease in value occurs as each individual bike component shows signs of wear and tear.
A simple example of this would be when you are considering selling your old bike to buy a new one. If it's been used for a couple of years or so, no one will buy it from you at the price you paid. Something similar occurs in the case of standard bike insurance.
Suppose you need to replace or repair certain parts of your bike damaged in an accident with a standard bike insurance claim. In that case, the payout you receive from your bike insurance provider will be based on the depreciated value of those parts.
Here is a table with the indicative rate of depreciation for two-wheelers over various time periods:
Depending on the age of your bike, you could face a substantial out-of-pocket expense in the event of an accident.
If you purchase a zero depreciation add-on, also called the nil depreciation add-on, your insurance company will cover the entire cost of repairs. This is because, with this add-on, the insurance company does not take into consideration the depreciated value of the parts. From the perspective of your insurer, your bike is as good as new.
You get extensive financial protection for your bike's plastic or fibre-made components, which is generally not covered under standard bike insurance.
You receive a larger settlement for your bike insurance claims since the insurer won't take away the amount of accumulated depreciation on the bike's damaged components.
You can make two claims per policy period. This applies to both new as well as renewed two-wheeler policies.
Some insurers provide coverage for things like key replacement, routine maintenance, towing help, and roadside assistance when you purchase zero depreciation bike insurance.
Since your bike is made up of a lot of components and not just the engine and body, even the material of various parts is taken into consideration when calculating the premium value for your insurance.
Here are the things that are covered under zero depreciation bike insurance -
The cost of the premium for zero depreciation bike insurance is much higher than standard bike insurance, but the coverage is higher in the case of zero depreciation bike insurance.
In the case of zero depreciation bike insurance, you get full compensation at the time of the claim. However, with standard bike insurance, various factors like the age of the vehicle, the depreciable value of the parts and more will be considered at the time of claim.
As mentioned earlier, zero depreciation bike insurance will consider your bike as good as new, but it is available only for a short period of time from the time of purchase. If your bike is old or used beyond a certain period of time, you will have to opt for standard bike insurance.
Normally, the cost of fibre and repairs is partially borne by the insurer and insured. However, in the case of zero depreciation bike insurance, the entire cost is borne by the insurer.
Knowing what is zero depreciation in bike insurance, along with its pros and cons, helps you make an informed decision that's more financially beneficial for you.
A zero depreciation add-on is always beneficial for your bike insurance. The depreciation add-on cover is generally 10-15% higher than the standard bike insurance plans.
Depreciable bike parts like nylon, rubber, and plastic are compensated, as are repair and replacement costs paid out at the moment the claim is resolved. Some insurance companies additionally cover battery and tyre damage.