The best way to cover your bike repair cost and save some money in case of an unfortunate incident involving your bike is by opting for a comprehensive bike insurance policy with a zero-depreciation add-on cover.
What is Zero Depreciation Bike Insurance
Value of a bike or two wheeler in terms of money over a period of time is gradually decreased due to factors such as normal wear and tear, age etc. This process is basically known as depreciation. During the time of claim, due to depreciation factor, people end up paying a huge sum of the overall claim from their own pocket. This is the time when a zero depreciation cover comes to the rescue of the bike insurance policyholder. Zero depreciation bike insurance provides a comprehensive and complete coverage without factoring in for the depreciation. For example – if your bike was involved in an accident and suffered extensive damage due to collision and if you have a zero depreciation cover the insurance provider will cover the entire cost of the loss. Zero depreciation bike insurance is expensive as compared to a standard bike insurance for the extra coverage.
Zero depreciation is for new bikes and the cover is available for a maximum age of between 2 years to 5 years. There is also a cap on the number of claims in a year which can vary from company to company. Damages due to mechanical breakdown or normal wear and tear are excluded from zero depreciation bike insurance. Zero depreciation bike insurance is best suited for people with luxury bikes having expensive spare parts, area or travel route which is accident prone, for new bikes or amateur riders.
Depreciation in Bike Insurance
The cost of repair or replacement of bike's metal, plastic, nylon, rubber and such other depreciable parts are not fully covered. The depreciated cost of such parts must be borne by the policyholder at the time of claims.
The depreciated cost that a policyholder pays varies with the material. The following table shows the percentage that a policyholder will pay in case of repair or replacement at the time of claims:
|Depreciable Bike Parts||Depreciated Cost (% of total cost)|
|Rubber, Nylon, Plastic||50%|
|Tyre(s) and Tube(s)||50%|
Consider a case where there is a need to replace bike's nylon parts. Only 50% of the cost will be paid by the insurance company and the rest of the cost will be paid by the policyholder.
But...if you have a zero depreciation add-on cover, you don't have to pay a penny for such depreciable parts.
Know the difference between a comprehensive policy and zero depreciation insurance for bike
Here’s the table that shows clearly the differences between a comprehensive policy with and without a zero depreciation add-on cover.
|Differentiating Points||Comprehensive Policy with Zero Depreciation||Comprehensive Policy without Zero Depreciation|
|Claim Amount||Full payment of garage bills||Deduction according to the depreciation|
|Cost of Depreciable Parts||Full payment||Partially paid|
|Premiums Cost||Comparatively higher||Comparatively lower than with zero dep add-on cover|
|Savings at the time of claims||Saving on all the repair/replacement cost of depreciable parts||Need to pay depreciable cost depending on the type of depreciable material|
Difference between a comprehensive policy with zero dep cover and without zero dep cover
Consider a bike having an IDV as Rs. 58,870. The premium for a comprehensive policy is Rs. 1,285 and comprehensive policy with a zero depreciation cover is Rs. 1,635 (i.e. just Rs. 350 extra).
The total repair cost comes up as Rs. 4,000 including repair and replacement cost of depreciable parts as Rs.800.
|Points||Without Zero Depreciation add-on cover||With Zero Depreciation add-on cover|
|Policy Premium||Rs. 1,285||Rs. 1,635|
|Depreciable Repair Cost||Rs. 800||Rs. 0|
|Total Repair Cost Company Pays||Rs. 3200||Rs. 4000|
|Total Money Invested||Rs. 1,285 + Rs. 800 = Rs. 2085||Rs. 1635|
|Savings||Rs. 0||Rs. 450|
This is where the real value of zero depreciation add-on cover in bike insurance comes into picture. As you can see that the zero depreciation cover helps in saving money at the time of claims, because the insurance company pays the cost of depreciable parts.
The above example shows a saving of Rs.450, those figures are indicative and subject to change with respect to various factors.
How does a policyholder of a bike insurance policy with zero dep add-on cover benefit?
- The repair/replacement cost of depreciable parts are fully covered. So, out-of-pocket expenses come down to a bare minimum.
- Receive complete payment of garage repair bills at the time of claim. So, there is no worry or apprehension and you experience complete peace of mind.
Should You Buy an add-on Zero Depreciation Cover?
- You should buy if you own a new and/or expensive bike.
- You should buy if your two-wheeler is not older than 2 years.
- You should buy if you are located in an accident-prone area.
- You should buy if you don't want to end up paying hefty garage bills pertaining to the repair or replacement of depreciable bike parts at the time of claim.
- You should buy if you love your bike and wish to save money.
Here's a list of few exclusions under a zero depreciation bike insurance cover:
- Any wear and tear of bike's depreciable parts due to ageing is not covered.
- Damage caused by an uninsured peril.
- Damage to items that are not insured like bi-fuel kit, tyres and gas kits.
- Damage due to a mechanical breakdown.
Also, a zero-depreciation cover is available for bike age up to 2 years. And maximum 2 claims are accepted during a policy period.
To buy or not to buy a zero depreciation cover is a question that all bike owners ask themselves. However, all bike owners who love their bike and wish to save money, opt for a zero depreciation cover when buying a bike insurance policy.
Hey, but if you are still not sure and have any questions, please feel free to ask us in the comments section. We would be glad to help!