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Does Depreciation Impact the Premium Cost of Your Two-wheeler?

By Juhi Walia
14 September 2022, 2:27 PM

Every asset undergoes depreciation over some time. Your two-wheeler is no exception to the rules of depreciation, which also occurs due to the use of assets. As your two-wheeler continues to be used, it undergoes tough situations. A zero depreciation two-wheeler insurance helps to cover a policyowner from hefty expenses that may arise while making claiming depreciation costs.

It is true that the bike insurance price gets affected due to depreciation. Before opting for any bike insurance policy, it is necessary to understand the impact of depreciation on the cost of insurance premiums. Ideal two-wheeler insurance at least covers the cost of all financial and legal liabilities which can arise during a mishap towards a third party.

It is pertinent for all bike owners to own a plan which accounts for depreciation on the vehicle. Depreciation costs will impact the premium on any insurance plan.

Impact of Depreciation on Bike Insurance Premium

Due to the application of depreciation on your two-wheeler, your vehicle's Insured Declared Value (IDV) comes lower. The IDV in bike insurance is the total amount your bike insurance online provider will likely provide you as compensation for damages to your vehicle during an unforeseen incident. The IDV is determined based on a two-wheeler's market value, not the bike's cost.

So, the depreciation rate determines the final amount that your insurance provider will likely compensate you for during an accident involving your two-wheeler. You should also know that as your vehicle ages, the premium you pay on it keeps getting lower. However, in the event of a mishap, the compensation received on such a vehicle also tends to decrease with time.

Rates of Depreciation on Two-wheelers

Your two-wheeler faces depreciation based on its age. Technically, your vehicle begins depreciating when you step out of a showroom with it. However, you can avoid this situation if you purchase zero dep bike insurance add on cover.

The following table will provide a clearer understanding of the depreciations' impact on the vehicle's value over time.

Age of the Two-wheelerRate of Depreciation
Under 6 months0%
6 months - 1 year5%
1 year - 2 years10%
2 years - 3 years15%
3 years - 4 years25%
4 years - 5 years35%
5 years - 10 years40%
Greater than 10 years50%

 Why is it Important to Understand Depreciation for Your Two-wheeler?

You should know that in the event of a loss or theft of your vehicle, your two-wheeler insurance policy's IDV will determine the maximum amount your insurer will cover in such an event. When understood, you will get insurance based on the current value of your vehicle. At the same time, the current market value of your vehicle can be affected by the specifications of your bike and depreciation, among several other factors.

When seeking two-wheeler vehicle insurance, depreciation impacts the value of the premium you pay. While the cost of the premium on your first-party bike insurance decreases, you should know that the consequent IDV of your vehicle also decreases due to depreciation. In mathematical terms, the depreciation rate is inversely proportional to the IDV you get from bike insurance companies.

So, the higher the rate of depreciation applicable on your vehicle, the lower the IDV of the vehicle. However, many policy owners wish to avoid this when buying bike insurance online. This can be done by selecting zero depreciation as an add-on when taking or renewing motor insurance.


Depreciation plays a central role in determining the IDV of a vehicle. To cancel its impact, a bike owner can opt for a zero depreciation cover while taking a bike insurance policy. This will, however, increase the premium that you pay for the bike, but in the end, your compensation value will not be impacted by the rate of depreciation on the bike.

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1. Does depreciation impact parts of a two-wheeler?

Depreciation impacts the parts of a bike and bike insurance. Different parts of a bike carry different rates of depreciation. So, for example, if your vehicle were to meet with an accident, and the tyres of the bike were to get damaged, your insurer will bear up to 50% of the cost of replacing such parts according to the bike insurance calculator and the rest will be borne by you.

2. What is zero depreciation cover?

Zero depreciation is a type of add-on for two-wheeler insurance renewal online purchased when you buy two-wheeler insurance or opt for bike insurance renewal online by paying some extra premium. Due to zero depreciation cover, the insurer will provide compensation for losses or damages on the vehicle without considering the depreciation element.

3. How is opting for a zero depreciation cover beneficial?

When selecting two-wheeler insurance online, zero depreciation cover will help you save money while paying for premiums. As a policyholder, getting a claim without considering the impact of depreciation will be very beneficial. Due to zero depreciation cover, all insured parts in third-party bike insurance will be reimbursed in full and will not result in any extra expenses out of your pocket.


4. Is it possible to get a zero depreciation cover after 2 years of purchasing a bike?

Yes, although it is best to take a zero depreciation cover for a vehicle up to two years from purchase, one can also take the add-on cover for any other vehicle. 

5. Which candidate is the most suitable for a zero depreciation add-on?

A zero depreciation cover is a very affordable cover that can help save money on replacing or repairing costs. The cover is most suitable for new bike owners. It is best to buy this cover only if your bike is not older than 2 years.

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