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Zero Depreciation Bike Insurance

Team AckoDec 24, 2023

The value of a two-wheeler depreciates with time. Having a core Comprehensive Bike Insurance policy is a good way to cover the cost of any damage that may incur to your vehicle and any third-party liability.


Tthe cost of repair or replacement of the depreciable parts, rubber, plastic, metal, etc. are not fully covered under the comprehensive policy. Only a certain percentage of the payment for the parts is covered, however, the deductible depreciable cost must be borne by the policyholder.

To ensure you don’t pay any extra amount from your pocket; you should opt for an add-on cover i.e. Zero Depreciation Cover.

Let us first know what depreciation means when it comes to bike insurance before defining Zero Depreciation cover.



What is Zero Depreciation Add-on?

A Zero Depreciation Add-on is extra coverage that you can avail along with a Comprehensive Two-wheeler Insurance policy. Depreciation is the reduction in the value of an asset due to wear and tear, it increases with the passage of time. That is why insurance companies reduce this value while settling a claim. However, with a Zero Depreciation Add-on, this depreciation of your two-wheeler won’t be deducted as it is not taken into account while settling the vehicle’s insurance claim.

What Is Depreciation In Bike Insurance?

Depreciation is the reduction in the value of a two-wheeler with time. Due to depreciation, the repair cost of depreciable bike parts, such as plastic, nylon, metal, rubber, etc., is not fully covered. The insurer will partially pay for the repair/replacement of such parts. The rest of the deductible depreciable cost of bike part(s) is borne by the owner of the insured bike. This deducted depreciation cost varies with the material of the part.

The table below gives the percentage to be borne by the owner of the bike:

Depreciable Bike Parts Deducted Depreciation
Rubber, Nylon, Plastic Parts 50%
Fibre glass 30%
Tubes and Tyres 50%
Glass 0%

The rate of depreciation depends on the age of respective parts of a bike. Take a look at the following table to understand this better:

Age of the vehicle % Depreciation
Not exceeding 6 months Nil
Exceeding 6 months but not exceeding 1 year 5%
Exceeding 1 year but not exceeding 2 years 10%
Exceeding 2 years but not exceeding 3 years 15%
Exceeding 3 years but not exceeding 4 years 25%
Exceeding 4 years but not exceeding 5 years 35%
Exceeding 5 years but not exceeding 10 years 40%
Exceeding 10 years 50%

Say you have a standard bike insurance policy and a plastic part of your bike needs replacement. After your claim is approved by your insurance company, they will pay 50% of the replacement cost for this plastic part and the remaining 50% will be borne by you.

However, if you buy a Zero Depreciation Add-on, your insurer will bear 100% of the cost for replacing this plastic part. With this add-on you do not have to bear the cost of depreciation(i.e. 50%) of the plastic part.

Types of Two-wheeler Insurance

For better understanding, two-wheeler insurance can be classified as (1.) Third-party Liability Insurance (2.) Comprehensive Two-wheeler Insurance (3.) Comprehensive Two-wheeler Insurance + Add-ons.

  1. The Motor Vehicles Act, 1988 has made it mandatory for vehicle owners in India to at least purchase a Third-party Liability insurance policy. This type of insurance policy is designed for the pedestrians and other third parties on the road that might be affected by your vehicle.

  2. Comprehensive Two-wheeler Insurance includes the Third-party Liability insurance and insures the vehicle against risks such as accidents, calamities, theft, etc.

  3. Along with a Comprehensive Two-wheeler Insurance, you can also choose Add-on covers such as Zero Depreciation, Two Wheeler Roadside Assistance, Pillion Rider Cover, Return-to-invoice etc.

Difference Between The Comprehensive Policy And Zero Depreciation Bike Insurance

A Comprehensive Bike Insurance policy will cover the cost for damage incurred to the insured bike (Under Own Damage component) and third-party liability (accidental death or disability to a person or damage to the property).

The cost of repairing or complete replacement of depreciable bike parts such as: rubber, plastic, metal, glass, nylon, fiber is not fully covered under a comprehensive policy.

Whereas, having an add-on of Zero Depreciation ensures that you don’t pay any extra amount at the time of claim. With Zero Depreciation cover, the cost of depreciable parts is fully covered.

The table below shows the major difference between a Comprehensive and Zero Depreciation cover.

Key Points Comprehensive Policy Zero Depreciation
Claim Settlement Deduction in the assessed claim cost Full payout for the parts
Depreciable Bike Parts Cost Not fully covered Fully covered
Vehicle Age Suitability Up to 15 years of age Up to 2 years of age
Premium Comparatively lesser than Zero Dep 15-20% higher

To make things simpler, let’s understand with an example:

Raj and Mahesh bought a new bike of same type for Rs. 80,000 in Jan 2017.

Raj bought only Comprehensive Policy, and Mahesh bought a Comprehensive policy with a Zero Depreciation add-on.

Consider a case where they both meet with a minor accident. They are entitled to receive the repair cost of the damage, but the values will be different. Here’s the difference:

Raj has to pay the deduction costs for replacing rubber, plastic, metal, glass, fibre parts, etc., on account of depreciation. At the same time, Mahesh does not pay replacement cost since the cost will be borne by the insurer.

Is it useful for any bike or two-wheeler owner?

Yes. Let us understand this with an example.

  • Consider the IDV of the bike as Rs. 65,000

  • The premium paid by Raj is Rs. 1,200, because he bought only Comprehensive policy whilst Mahesh paid Rs. 1,440 (i.e. Rs. 240 extra) by adding a Zero Depreciation cover

  • The total repair cost is Rs. 4,000

Repair Cost Table:

Key Points Damage Cost %Depreciation Deducted Depreciation Cost
Metal Parts 2,000 5% 100
Plastic Parts 1,000 50% 500
Rubber Parts 500 50% 250
Labour 500 0% 0
Total 4,000 - 750

Consider the cost invested by Raj and Mahesh

Key Points Raj (Rs.) Mahesh (Rs.)
Premium Paid 1,200 1,440
Repair Cost Paid 750 0
Total Money Invested 1,950 1,440
Savings (Rs.) (Workshop Cost – Total Money Invested) 4,000 – 1,950 = 2,050/- 4,000 – 1,440 = 2,560/-

Total Money Invested by Raj is Rs. 1,950, whereas, Mahesh invested Rs. 1,440.

The total repair cost is Rs. 4,000

From the example you can see that, even though Mahesh had to pay Rs. 240 extra to buy a Zero Depreciation cover, he did not have to pay money at the time of claim. Thus, he saved Rs. 500. On the other hand, Raj had to bear the entire cost of depreciation.

In this way, you will gain from a Zero Depreciation cover in the long run, even if you spend an extra amount to buy it.

Key Benefits:

  • The cost of repair and replacement of depreciable parts is fully covered

  • No need to pay extra money at the time of claim


There some exclusions under Zero Depreciation cover:

  • Zero depreciation cover is available maximum up to the vehicle age of 2 years

  • Maximum 2 claims in a policy period

  • Usual wear and tear of parts that need repair or replacement is not covered

  • Claim shall be accepted only if the incurred damage is due to the perils mentioned in Own Damage

  • You do not get the Zero Depreciation benefit in case of Total Loss (theft or stolen bike) or Constructive Total Loss (damage beyond repair)

**Ideal Conditions in Which Zero Depreciation Add-on Can be Availed**

  1. The one who has a new and/or expensive bike

  2. If your two-wheeler is not older than 2 years

  3. When a person is located in accident prone area or heavily trafficked area

  4. In case the person doesn’t want to pay any money for repair or replacement at the time of claim

Zero Depreciation is a pocket-friendly add-on cover that covers the cost of depreciable parts. The whole repair cost will be borne by the insurer if you have Zero Depreciation add-on cover for your bike.

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