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What Is Zero Depreciation Cover In Bike Insurance?

Sampurna Mitra|3 min read|18 July, 2022

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The value of any physical asset reduces over a period of time due to wear and tear. And your bike, for which you saved up for years to buy, is unfortunately no exception. Depreciation also has a bearing on your bike insurance — that being a standard bike insurance policy pays out a claim after deducting the depreciation value. This concern can however be addressed with a Zero Depreciation Add-on Cover.

What Is Zero Depreciation Bike Insurance Cover?

Zero Depreciation, also known as nil depreciation insurance, is an add-on you can avail when you’re purchasing a comprehensive bike insurance policy. If this add-on was part of your policy when a claim was made, you will receive the payout without any deduction for your bike’s depreciable parts (rubber, fiberglass, plastic parts, etc.).

To understand how the Zero Depreciation Bike Insurance cover works, let us look at the current depreciation rates applicable and what happens if you have availed the add-on with your base policy:

Depreciation rates for bike parts are as under:

For all rubber/nylon / plastic parts, and batteries — 50%

For fiberglass components — 30%

For all parts made of glass — NIL

Depreciation rates for all other parts, including wooden parts, are as under:

Age of Vehicle — % of 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%

Let’s say you have a comprehensive bike insurance policy without the add-on. A claim has been made and the rubber parts have been damaged and need to be changed.

Scenario 1 — You don’t have a Zero Depreciation Bike Insurance Cover:

Your insurance company will pay for 50% of the replacement cost of such rubber part, while the remaining 50% would have to be paid by you.

Scenario 2 — You have a Zero Depreciation Bike Insurance Cover:

You don’t have to bear the replacement cost of such rubber part as it would be borne by the insurance company.

With a Zero Depreciation Cover, the claim amount payable stands increased and the financial burden on the policyholder is decreased.

Should You Buy A Zero Depreciation Cover?

There are some important factors you need to consider before availing this add-on with your comprehensive bike insurance policy. They are

  • Age of Bike — Insurance companies offer this add-on for bikes up to 5 years of age.
  • Make and model — The make and model of your bike have a major bearing on cost of parts. So, while the premium for this add-on will be higher if you own a luxury or expensive bike, this add-on is particularly important as it shoulders the burden of repairing and replacing an expensive part
  • Number of claims — There may be a limit to the number of times this cover can be availed. It is usually allowed for up to 2 claims. Please check with the respective insurer before availing the cover.
  • Where you ride — The location where you generally ride can impact the premium for this add-on. The premium may be higher in high traffic and accident-prone areas, and vice versa.

While you have to pay a little extra premium for this add-on, the savings can be significant as you would be completely covered for the repair/replacement cost of depreciable parts.

Zero Depreciation Add-on Cover is for you if you find yourself nodding yes to any of the conditions mentioned below:

  • Your bike is new
  • Your bike’s spare parts are expensive
  • You have recently started riding
  • You regularly ride through accident-prone areas

Even if the above don’t apply to you, getting a Zero Depreciation cover is always a good idea as you benefit from the added protection that comes with it.

Please note, the maximum number of claims admissible under this add-on is 2, during a particular policy period.

What’s Not Covered Under Zero Depreciation Bike Insurance Cover

For every insurance policy, you will come across a few exclusions. This is applicable to Zero Depreciation Bike Insurance as well. You cannot make a claim under this cover for the following reasons:

  • Damage of bike or its parts due to normal wear and tear on account of aging
  • Benefit of zero depreciation in the event of theft
  • Claim made outside of the policy term
  • Damages due to mechanical problems

Read through the policy wordings to know the list of inclusions and exclusions that will apply to you. The terms and conditions may differ from insurer to insurer.

Opting for Zero Depreciation add-on cover with your comprehensive bike insurance policy is a good way to boost your protection. You get the benefit of receiving the complete claim amount, since the insurance company will not make any subtractions for depreciation from your payout.

Note: Zero Depreciation Add-on Cover is currently not available for bike insurance policies on the PhonePe App.

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