What Is Zero Depreciation Bike Insurance and How Much Does It Cost?

Rising city traffic, costly spare parts, and increasing on-road risks necessitate a comprehensive two-wheeler insurance policy, leaving riders to pay additional amounts because of depreciation deductions. In such situations, the concept of zero depreciation steps in.

Zero depreciation cover for bike insurance functions as a valuable add-on feature that guarantees policyholders receive the full claim amount for repairs or replacement without deductions. This add-on is available with comprehensive or own-damage two-wheeler insurance policies.

Typically, a zero depreciation bike insurance add-on costs an extra 10% to 20% of the policyholder’s base Own Damage (OD) premium. However, the actual cost varies by insurance company and policy type.

This guide explains what zero depreciation cover for bike insurance is, its coverage, costs and factors to consider while selecting this add-on.

What is Zero Depreciation Bike Insurance?

Zero depreciation bike insurance is an optional add-on cover that guarantees no depreciation deduction at the time of claim settlement. It ensures that the policyholder gets the full claim amount for replacement or repair without considering wear and tear. 

In standard bike insurance policies, insurance companies do not cover the loss in value of bike parts because of wear and tear over time.  

For instance, if you damaged a ₹6,000 metal component, your standard policy, in which depreciation of 40% is applicable, would pay only ₹3,600. However, with zero depreciation cover, you may get the entire ₹6,000 without any depreciation deduction, as per your policy conditions.

Thus, with this type of bike insurance add-on, you get the following benefits:

1. You get full protection of your financial interests.

2. Your vehicle’s damaged parts are replaced or repaired without any cost deduction.

3. You get peace of mind every time you ride the two-wheeler.

When Should You Opt for a Zero Depreciation Cover?

You should opt for a zero depreciation add-on cover in the following cases:

1. New Bike Owners: When you just bought a bike, or it is between 3-5 years old, zero depreciation cover guarantees that the full value of parts is covered without depreciation deductions.

2. Expensive Bikes: Premium bike owners benefit from this cover, as it covers costly replacements or repairs without considering depreciation.

3. New Drivers: For new drivers, there are chances of minor accidents, so getting this cover can save you from out-of-pocket repair costs.

4. Riders in Accident-Prone Zones: If you ride in high-traffic zones or poor road conditions, the chances of accidents rise, necessitating this cover.

What are the Benefits of Zero Depreciation Cover in Two-Wheeler Insurance?

The most significant benefits of purchasing a zero depreciation cover for bike insurance  are listed below:

Full Claim Settlement

Policyholders with a zero depreciation add-on cover are covered for the full amount of replacement or repair of the damaged parts without subtracting any depreciation value. Therefore, this shows how policyholders maximise their claim settlement compared to regular policies.

Minimal Out-of-Pocket Expenses

Bike owners with this add-on feature can maximise savings and reduce out-of-pocket expenses to zero. This is because it does not consider the depreciation of their vehicle or its parts during the claim settlement process.

Improved Policy Value

With this add-on, policyholders can strengthen their base Standalone Own Damage (OD) Policy or Comprehensive Bike Insurance by closing financial gaps happening due to the normal wear and tear of their bikes.

Greater Resale Value

As this add-on cover allows the insured to afford genuine, high-quality repairs at certified workshops, their bike stays in excellent physical condition. Thus, allowing an optimal market resale value even after years of regular use.

Extensive Bike Part Coverage

It offers coverage for high-depreciation bike parts such as rubber, glass, fibre, plastic, and glass components. Therefore, not getting this add-on feature can carry up to a 50% deduction in standard policies. 

Also Read: What is PUC in Bikes & Why is It Important?

What is the Bike Insurance Depreciation Rate for Different Parts of the Bike?

Depreciation is the slow loss in a two-wheeler’s value over time because of regular wear and tear. In the context of bike insurance policies, it notably affects the claim amount the insured gets for part replacements or repairs.  Accordingly, the Insurance Regulatory and Development Authority of India (IRDAI) sets the vehicle depreciation rates.

Below is the table reflecting the depreciation rates for bikes and different bike components.

The depreciation rate for all other bike parts, such as metal parts, is calculated based on your bike’s age

You pay the depreciated amount during repairs unless you add zero depreciation cover. So, buy a zero depreciation add-on from Bajaj General during motor insurance renewal to avoid paying these costs during claims.

How Does the Zero Depreciation Add-on Work on Bike Insurance Claims?

Suppose you have a ₹1.5L TVS Apache RTR 160 and you met with an accident a few weeks ago. After a highway crash, you replace both plastic side fairings, two tyres, and the rubber seals of your bike. You have claimed your bike insurance; now calculate the claim amount with and without the zero-dep add-on for your bike after an accident.

Your total repair bill: ₹40,000, which includes: 

1. Plastic fairings: ₹24,000

2. Two tyres: ₹8,000

3. Rubber seals & gaskets: ₹2,000

4. Labour & painting: ₹6,000

Now, understand how much you have to pay without zero-depreciation bike insurance 

Insurers apply depreciation on parts:

Plastic fairings at 30% depreciation: ₹24,000 − 30% = ₹16,800 and your insurer will pay this

Tyres at 50% depreciation: ₹8,000 − 50% = ₹4,000 paid by your insurance company

Rubber parts at 50% depreciation: ₹2,000 − 50% = ₹1,000, and the insurer will pay for it.

Labour has no depreciation: ₹6,000 paid by your insurer

So, your insurer pays total: (₹16,800 + ₹4,000 + ₹1,000 + ₹6,000) = ₹27,800

You have to pay: ₹40,000 − ₹27,800 = ₹12,200

Are you feeling confused: Is zero dep worth it for a two-wheeler?

Yes, after buying the Zero Depreciation Add-On from Bajaj General Insurance, check your claim amount.

The insurer ignores depreciation and covers the full part costs:

Parts: (Plastic fairings + two tyres + Rubber seals & gaskets)

= ₹24,000 + ₹8,000 + ₹2,000 = ₹34,000

Labour: ₹6,000 

So, with nil depreciation bike insurance, Bajaj General Insurance will pay a total of repair costs: ₹34,000 + ₹6,000 = ₹40,000

It means you pay nothing, excluding policy deductibles. With nil depreciation, bike insurance saves money on part-heavy claims. For this repair, you can save ₹12,200.

What are the Key Differences Between Standard and Zero Depreciation Bike Insurance Cover?

The primary differences between zero depreciation bike insurance add-on cover and a standard two-wheeler insurance policy are listed in the table below:

What Does Zero Depreciation Bike Insurance Cover?

1. Two-wheeler depreciable parts include rubber, nylon, plastic, and fibreglass parts. The zero depreciation cover will include the cost of repair/replacement in claim settlements.

2. The add-on cover will be valid for up to 2 claims during the policy term.

3. The zero depreciation cover is specifically outlined for bikes/two-wheeler with a maximum age of 5 years.

4. The zero depreciation cover is available for new bikes as well on the renewal of bike insurance policies.

5. Read the policy documents carefully, as this cover is available for the designated two-wheeler models only.

Exclusions of Zero Depreciation Cover

1. Remuneration due to uninsured peril.

2. Damage caused by a mechanical slip-up.

3. Damage caused by common wear and tear as a result of ageing.

4. Compensation for damage to uninsured bike items like the bi-fuel kit, tyres, and gas kits.

5. The add-on cover does not cover the cost if the vehicle is completely damaged/lost. However, the total loss can be covered by the insurance company if the Insured Declared Value (IDV) is sufficient.

Also Read: Comprehensive vs. Third-Party Bike Insurance

Will Your Premium Increase After Availing a Zero Depreciation Cover?

Yes, choosing zero depreciation bike insurance will increase your premium amount. Since the depreciation cost is waived off, a higher premium is charged for this cover. The premium increase provides a balance for the insurer, offsetting the risk of potentially higher claim payouts. Many find it a worthwhile trade-off for the added financial protection it offers against the wear and tear of bike parts.

Factors to Keep in Mind before Choosing Zero Depreciation Cover

1. Age of the Vehicle: Zero depreciation cover is usually available for new or relatively new bikes, typically up to 3-5 years old. Check the eligibility criteria before opting for it.

2. Premium Cost: It increases the overall premium of your insurance policy. Assess whether the added benefits justify the extra cost based on your budget.

3. Coverage Limitations: Understand what parts are covered under the zero depreciation policy. While it covers most parts, certain exclusions like engine damage due to oil leakage may apply.

4. Number of Claims Allowed: Insurers often limit the number of zero depreciation claims you can file in a policy year. Confirm the allowed limit before purchasing the cover.

5. Condition of the Vehicle: If your bike is older or in poor condition, this cover might not provide significant benefits, as depreciation already applies heavily.

6. Insurance Provider’s Terms: Different insurers have varying terms and conditions for zero depreciation covers. Compare policies to get the best deal with maximum benefits.

7. Repair Costs in Your Area: If repair costs for bike parts are high in your area, this cover can save you significant money during claim settlements.

8. Type of Bike: Zero depreciation cover is especially beneficial for high-end or premium bikes, as their parts tend to be more expensive to repair or replace.

9. Frequency of Usage: If you use your bike frequently or travel long distances, you may be at a higher risk of damage, making this add-on cover a wise choice.

10. Exclusions: Understand the exclusions, such as wear and tear due to regular use or damages outside the policy's coverage scope, to avoid surprises during claims.

11. Policy Tenure: Check if this add-on can be renewed along with the base policy or if it needs to be purchased each year separately.

Conclusion

A standard two-wheeler insurance policy is more beneficial if you add the zero depreciation cover for bike insurance. This gives you a worry-free claim process and does not disrupt your planned budget. Drive smart and get the best insurance features after a two-wheeler insurance policy comparison online.

Check the zero-dep bike insurance costs from Bajaj General Insurance and add the plan to avoid paying for part depreciation and cut your repair costs during claims.

Frequently Asked Questions

Can one purchase a zero depreciation cover for a third-party insurance cover?

No, zero depreciation cover cannot be purchased with third-party insurance as it only applies to comprehensive bike insurance policies, which cover both third-party liabilities and own damage.

How many times can a zero depreciation claim be made?

Insurers typically limit the number of zero depreciation claims a policyholder can make in a policy term. Allowing two claims per year is common, but this can vary, so check your policy details.

Should I buy a zero depreciation add-on if my bike is 6 years old?

Purchasing a zero depreciation add-on for a bike that is 6 years old may not be cost-effective, as these covers are generally more beneficial for newer bikes.

Is the zero-depreciation add-on useful for a new bike owner?

Yes, the zero-depreciation add-on is highly useful for new bike owners as it ensures that depreciation is not deducted from the claim amount, making it ideal for maintaining financial protection against new parts replacement costs.

Is the zero-depreciation cover for bike insurance useful for an old bike owner?

Zero-depreciation cover tends to be less beneficial for older bikes, as the cost might outweigh the benefits due to higher premiums and the limited availability of such covers for older models.

I am buying a three-year-old second-hand bike. Should I opt for the zero-dep cover?

Yes, opting for zero depreciation cover can be beneficial for a three-year-old bike as it will help cover the costs without the depreciation factor, especially if the bike is in good condition and the premium fits your budget.

Why should I choose Zero Depreciation Cover?

Zero depreciation cover ensures full claim settlement without deducting the depreciation cost of bike parts. It reduces out-of-pocket expenses and provides greater financial protection, especially for new or high-end bikes.

Can I add Zero Depreciation Cover at any time?

No, zero depreciation cover can typically only be added when purchasing or renewing a comprehensive bike insurance policy. It is not available as a standalone cover.

Can one purchase a zero depreciation cover for a third-party insurance cover?

No, zero depreciation cover is only available with a comprehensive or standalone own-damage insurance policy, not with third-party insurance.

 Is a zero depreciation policy available after 5 years?

In most cases, zero depreciation cover is available for bikes up to 5 years old. Some insurers may offer extended options for older bikes, but it depends on the policy terms.

 Can I get zero depreciation insurance beyond 5 years for a bike?

Yes, a few insurers provide zero depreciation cover beyond 5 years, but it is rare and subject to additional inspections and higher premiums.

 Which is better: Comprehensive or Zero Depreciation?

Comprehensive Insurance provides broad coverage, including third-party and own-damage, but deducts depreciation during claim settlements, while Zero Depreciation Cover enhances comprehensive insurance by eliminating depreciation deductions, offering maximum claim reimbursement. It is better for new or high-value bikes.

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