Zero Depreciation Add-on Cover in Bike Insurance

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Zero depreciation or the ‘Nil depreciation policy’ is an add-on that permits the policyholder to claim the complete expenditure incurred at the time of repair of one’s damaged bike. The insurance company guarantees that the wear and tear costs i.e. the depreciation costs of the bike are not deducted from the final claim settlement amount.

Jaya is really happy that she purchased a zero depreciation cover for her brand new two-wheeler. She met with a minor accident and her insurance company is processing her claims to give her the whole amount without any depreciation costs being deducted. Wish to receive that same comfort and security that Jaya has? Read on to know-how!

The Insurance Regulatory and Development Authority of India (IRDAI) has assigned rates of depreciation for different parts as follows - 

Bike partsPercentage deducted as depreciation
Parts made out of glassNil 
Fibre or glass components30%
Plastic, nylon and rubber parts50%

The overall depreciation factor based on the age of the bike, as outlined by the IRDAI is – 

Age of the bikePercentage of depreciation for fixing Insured Declared Value
≤ 6 months5%
6 months – 1 year15%
1 year – 2 year20%
2 year – 3 year30%
3 year – 4 year40%
4 year – 5 year50%

In the presence of the zero depreciation add-on, one can save all the amounts that are highlighted above.

Features & Benefits of Zero Depreciation Cover 

  • Enhances coverage and secures the bike more holistically.
  • Full compensation for the damage suffered at the time of final settlement.
  • Some insurance companies offer coverage for key replacements, roadside assistance, towing assistance, regular maintenance etc.
  • The add-on comes at an affordable price. It helps the bike owner to save on some money.

What is Covered?

The following is covered under the zero depreciation cover – 

  • Losses incurred due to depreciation of parts such as nylon, rubber, fibreglass etc.
  • Cost of replacement and repair of parts as mentioned in the policy.
  • Losses incurred due to partial damages to battery and tyres without subtracting depreciation.

What is Not Covered?

The standard exclusions under this policy are as follows – 

  • Damages caused to uninsured bike parts namely, tyres, gas kits, fuel kits, etc.
  • Damages caused due to mechanical faults.
  • Cases of total damage or loss to the vehicle.
  • Losses incurred to uninsured perils.

Who Should Buy Zero Depreciation Add-on Cover?

  • Bike owners whose vehicle is less than 5 years old.
  • Bike owners who wish to save on depreciation costs and wish to derive maximum benefit from their policy cover.
  • Bike owners who live in accident-prone areas hence higher chances would be of claim. This is where a Zero Depreciation Cover would be helpful for them.

How Zero Depreciation Cover is Better Than a Normal or a Comprehensive Two-Wheeler Policy?

BasisZero depreciation coverNormal cover
Claim settlementFull compensation will be provided to the policyholder in case of a zero depreciation coverThe claim amount is received after standard deduction of depreciation
PremiumThe premium amount will be higher than the normal insurance cover.

The premium paid will be of a lesser amount.

Repairing costsThe repairing costs of fibre, glass, rubber, and plastic parts are borne by the insurer in case of zero depreciation cover.The repairing costs have to be borne by the policyholder.
Age of the carMeant for new cars as the policy usually covers two claims during a policy term for cars up to the age of 5 years only.

Meant for cars that are older than 5 years.

Limit on the number of claims in the termUsually, a cap of 2 is placed for making claims.No such limit exists.

Factors to Keep in Mind Before Choosing Zero Depreciation Cover  

  • It should not be the enabling factor for careless driving.
  • It does not cover the car in case of total loss such as theft.
  • The cap on the number of claims that can be filed in a year depends on the bike insurance company.
  • This cover is available for designated two-wheelers having own damage or comprehensive policy.
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