Zero Depreciation Bike Insurance

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

The 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.

Before defining Zero Depreciation cover, you must know what depreciation means when it comes to bike insurance.

What Is Depreciation In Bike Insurance?

Due to depreciation, the cost of repair of depreciable bike parts such as plastic, nylon, metal, rubber, etc. is not fully covered. Only partial cost is covered. The rest of the deductible depreciable cost of bike part(s) is borne by the insured/policyholder.

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 PartsDeducted Depreciation
Rubber, Nylon, Plastic Parts50%
Fibre glass30%
Tubes and Tyres50%
Glass0%

Rate of depreciation varies with age for all other parts (Other than the parts mentioned above) including wooden parts and it is listed below:

Age of the vehicle% Depreciation
Not exceeding 6 monthsNil
Exceeding 6 months but not exceeding 1year5%
Exceeding 1year but not exceeding 2years10%
Exceeding 2years but not exceeding 3years15%
Exceeding 3years but not exceeding 4years25%
Exceeding 4years but not exceeding 5years35%
Exceeding 5years but not exceeding 10years40%
Exceeding 10years50%

For example, consider any nylon or plastic parts of your bike, at the time of repair after the claim has been approved, 50% of the cost will be borne by the policyholder, and the company will pay 50% of the cost.

However, if you add a Zero Depreciation Add-on Cover, it takes care of the depreciated cost at the time of claim. It means, 100% cost of nylon, and plastic parts will be covered.

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) and in case of any 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 the comprehensive policy.

Whereas, having an add-on of Zero Depreciation cover 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 PointsComprehensive PolicyZero Depreciation
Claim Settlement Deduction in the assessed claim costFull payout for the parts
Depreciable Bike Parts CostNot fully coveredFully covered
Vehicle Age Suitability Up to 15 years of ageUp to 2 years of age
PremiumComparatively lesser than Zero Dep15-20% 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 Comprehensive policy with a Zero Depreciation Cover as an add-on.

Consider a case where they both met 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 depreciated deduction costs for any replacement cost of rubber, plastic, metal, glass, fiber parts, etc. Whereas, repairing and replacement cost is not paid by Mahesh. The whole cost will be borne by Acko.

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

Yes. Let us understand 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 pays Rs. 1,440  (i.e. Rs. 240 extra) by adding a Zero Depreciation cover.

The total repair cost comes up as Rs. 4,000

Repair Cost Table:

Key PointsDamage Cost %Depreciation DeductedDepreciation Cost
Metal Parts2,0005%100
Plastic Parts1,00050%500
Rubber Parts50050%250
Labour5000%0
Total4,000-750

Consider the cost invested by Raj and Mahesh

Key PointsRaj (Rs.)Mahesh (Rs.)
Premium Paid1,2001,440
Repair Cost Paid 7500
Total Money Invested1,9501,440
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 cost Rs. 4,000

So you can clearly see that though Mahesh paid Rs. 240 extra up front, but he didn’t have to pay a penny at the time of claim or repair. A net saving of Rs. 500

You can clearly see the benefit of the Zero Depreciation cover for any two-wheeler. This is where the real value of Zero Depreciation add-on cover comes.

Key Benefits:

  • The cost of repair and replacement of depreciable parts is fully covered
  • No need to pay any extra amount of money at the time of claim
  • Complete peace of mind

Exclusions:

There some exclusions under Zero Depreciation cover:

  • Zero Dep 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 needs 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)

 Who Should Buy Zero Depreciation Cover?

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

Conclusion:

Zero Depreciation is a pocket-friendly add-on cover that gives you a complete peace of mind and gets you covered even for the cost of depreciable parts. The whole repair cost will be borne by Acko if you have a Zero Depreciation add-on cover for your bike.

%d bloggers like this: