• 25th April 2024

Benefits of having Zero-Depreciation cover in Two-Wheeler Insurance

Receive full claims amounts on your two-wheeler insurance without any deductions with a zero-depreciation add-on cover. Find out the benefits of this add-on cover and check if it’s the right choice for you.

A zero-depreciation cover is extra coverage that a policyholder can purchase along with a comprehensive two-wheeler insurance plan. It’s optional, and the insured pays a higher premium to avail this added benefit.

Why the need for a Zero-Depreciation Cover?

As you would probably know, all two-wheelers depreciate over time due to regular wear and tear. To understand the importance of a zero-depreciation cover, let’s take a look at how depreciation impacts two-wheeler insurance claims.

In a regular two-wheeler policy, during a claim, the insurer deducts the depreciation value for the fibre, plastic, glass, and rubber parts.

Note that the rate of depreciation for different parts of the motorcycle is fixed by the IRDAI (Insurance Regulatory Authority of India), and the insurer uses these guidelines to calculate depreciation rates. As per the IRDAI guidelines, the rate of depreciation for:

  • Tyres and Tubes/Rubber/Nylon/Plastic Parts/Batteries – 50%
  • Fibre/Glass materials – 30%
  • And so on

In a comprehensive two-wheeler insurance policy,

Received Claim Amount = Cost of Replacement/Repair – Depreciation of the Replacement Part

On the other hand, when you have zero-depreciation cover added to your comprehensive two-wheeler policy,

Received Claim amount = Total cost of Replacement/Repair

The Importance of Zero-Depreciation Cover

Let’s explain the importance of zero-depreciation add-on cover with an example. Let’s say that your bike was involved in a road accident, and the fibre body parts like – visor, door panel, mudguard, visor glass – require replacement. You have filed a claim with your insurer, and the claim has been approved.

If you have a  two-wheeler policy without the zero-depreciation cover, the insurer pays you only 70% of the cost of replacement, the remaining 30% you have to bear out of pocket. In the above example, since the damaged parts are made of fibre, the insurer deducts 30% and pays 70%.

On the other hand, if you have zero-depreciation add-on cover, the insurer pays you 100% of the replacement costs.

Benefits of Zero-Depreciation Add-on Cover

One of the biggest complaints of two-wheeler owners during claims is that they never receive the full claim amount. The amount received is significantly lower, as the insurer deducts the depreciation of the parts requiring replacement. With a zero-depreciation add-on cover, you can receive the full claim amount, thereby reducing out of the pocket expenses significantly.

A zero-depreciation cover extends the basic coverage of the comprehensive plan, thereby offering the bike owner complete peace of mind.

Who is it for?

The zero dep cover is an excellent choice for bikers:

  • Who have added costly replacement parts to their vehicle
  • Own a brand new bike – a zero dep cover is applicable only for bikes aged less than fiveyears
  • Or live in accident-prone areas

In such cases, the insurer provides you the cost of replacement without any deductions due to depreciation, thereby reducing the amount you pay out of pocket. If your bike requires expensive spare parts, make sure to add the zero-dep cover to your plan, while purchasing your bike insurance online.

Get more out of your Comprehensive Policy with Zero Depreciation Cover

The zero-depreciation cover is one of the most popular and most useful add-ons covers to a comprehensive bike insurance plan. However, note that it’s an optional cover, and choosing it increases your annual premium. So, make sure to evaluate your requirements and decide whether the cover offers you the best value.

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