Selecting an insurance plan for your two-wheeler that best suits your insurance needs and also fits well within your budget can be a daunting task. Many insurance companies offer two-wheeler insurance policies at different prices for different advantages. Third-party liability insurance is the most common type. For more coverage, you can opt for a comprehensive insurance plan, which covers almost every possible damage issue. Apart from these two, there is a third type of insurance known as Zero Depreciation Cover, which is basically an extension of the comprehensive plan. In this article, we will see the difference between these two types of coverage plans for you to make an informed decision about insuring your two-wheeler.
What is Comprehensive Insurance Cover for a two-wheeler?
A Comprehensive Insurance cover is generally recommended for your two-wheeler as it covers almost all liabilities. It is a combination of Third Party and Own Damage Cover.
A Comprehensive bike insurance plan offers broader coverage because it covers third-party liabilities such as damage to a third-party property, injury or death of a third party. Apart from this, it also covers own damage (OD) against personal accidents, theft or natural calamities like fire or floods. Some companies also offer coverage against man-made calamities, including riots, strikes and vandalism. It also covers total loss, i.e. damage beyond your two-wheeler's repair.
One major factor that is considered while settling the claim is Depreciation of the two-wheeler and its parts.
What does Depreciation mean?
A decrease in the value of a product over the years of usage is called depreciation. The value of all machines goes down over time. When you use your two-wheeler for a few years, its market value decreases. This phenomenon is known as Depreciation.
Not only does the total value of your two-wheeler depreciate over time, but the value of several individual parts also depreciates.
Any two-wheeler is made up of parts such as metal parts, rubber and plastic parts that depreciate in value over time. The total cost of repair or replacement of these parts is not covered under the comprehensive policy claim. Only a partial cost is compensated.
Here's how depreciation is calculated:
The Insurance Regulatory and Development Authority of India (IRDAI) has guidelines for insurers to calculate the depreciation amount for each part of the two-wheeler.
Rate of Depreciation applicable on Two Wheeler Parts
For the parts made of rubber or nylon or plastic, tyres and tubes, and batteries - 50%
For the parts made of Fibreglass - 30%
For the parts made of Glass – Nil
The rate of depreciation for all other parts, including wooden parts, is calculated as per the following schedule:
| Age of Two Wheeler | % of Depreciation |
| Up to 6 months | 0 |
| 6 months to 1 year | 5 |
| 1-2 years | 10 |
| 2-3 years | 15 |
| 3-4 years | 25 |
| 4-5 years | 35 |
| 5-10 years | 40 |
| 10+ years | 50 |
Rate of Depreciation for Painting: In the case of painting, the depreciation rate of 50% is applied only on the material cost of total painting charges. In case of a consolidated bill for painting charges, the material component is considered as 25% of total painting charges.
To beat this depreciation, you must get an add-on known as Zero Depreciation Cover along with the Comprehensive Insurance Policy.
What is Zero Depreciation Insurance Cover?
A Zero Depreciation bike insurance add on, also known as 'Nil Depreciation', is a type of add-on cover that is purchased along with a Comprehensive Insurance policy. It provides a complete 100% depreciation coverage for almost all parts of your two wheeler at the time of filing a bike insurance claim. If your two wheeler suffers damage then the insurance company will pay the full amount of repair and/or replacement of damaged parts. Zero Depreciation comes at a slightly higher cost than the Comprehensive plan.
This plan is helpful in two cases: one, if your two wheeler gets damaged in an accident then the company will pay for the repair and replacement of damaged parts. Second, if the accident leads to the total loss that is loss beyond repair then the company will not apply the depreciation rules and take care of the total expenses. You do not have to pay any amount from your pocket.
However, it's crucial to note is that in Zero Depreciation Cover, only 2 claims are allowed by most of the bike insurance companies. If you claim the third time, then it will be considered as s standard policy without the benefits of Zero Depreciation.
Comparison between Comprehensive and Zero Depreciation Insurance Cover
Both the covers have some differences that you need to consider before you choose any one of them. The following table compares Comprehensive and Zero Depreciation Insurance Cover
Factor | Comprehensive Plan | Zero Depreciation Plan |
| Cost of Repair | You have to pay a part of the bill because depreciation is considered | Total cost is borne by the insurance company |
| Cost of Premium | Regular | Slightly higher |
| Amount of Claim Settlement | It will be lower as the depreciation is estimated for all car body parts. | It will be higher as the depreciation is not estimated. |
| Age of the Two Wheeler | Can be availed any time | Zero depreciation cannot be availed for two wheeler older than 3 years |
| Number of Claims in a Year | No limit | Only 2 |
Conclusion
A Comprehensive Insurance plan with a Zero Depreciation add-on cover provides complete cover for your two-wheeler, especially if you are a new vehicle owner. It is advisable to pay a slightly higher premium than expensive repair costs.
Read more-
