Friday, February 7, 2025

Know about how depreciation impacts the cost of two wheeler insurance.

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When planning to buy two wheeler insurance keep in mind that the depreciation fee is one of the critical elements that significantly influences how much your two wheeler insurance will cost. IDV, or insurance declared value, is a term we need to understand to know the depreciation costs completely.

To put it in simple words depreciation is the reduction in the value of a two wheeler owing to regular use and wear and tear. Now to stay protected against this reduction in value and its corresponding consequences, an own damage insurance policy or an add-on zero depreciation in bike insurance may be purchased online. Your best bet to find the best available policies is to look for two wheeler insurance online. Let us now move ahead with understanding how depreciation affects the cost of your insurance.

What is IDV?

Your bike’s current market value is known as the IDV or Insured Declared Value. It is also the sum that the insurance company will pay if the covered bike is destroyed. If a bike is stolen or irreparably destroyed, it is assumed as a complete loss. When insurance firms determine the IDV, they factor in the applicable depreciation. Owing to the component of depreciation the vehicle’s IDV reduces as it ages and experiences wear and tear.

Impact of depreciation on two wheeler insurance policy

Understanding your two wheeler’s depreciation value is essential since it lowers the IDV and the insurance premium you pay. Thus, it can be claimed that the IDV and the rate of depreciation of your two wheeler are inversely related. Your bike’s IDV will be lower if its depreciation rate is high. You may reduce the depreciated value of your bike by adding zero depreciation in bike coverage to your insurance plan. The rate of depreciation rises with the age of your bike and reduces IDV. This ultimately affects the bike insurance policy’s premium. This demonstrates that with the bike’s age, the claim value is reduced due to the low IDV if the insured makes a claim.

What is a zero depreciation add-on?

The Zero Depreciation add-on cover makes sure that the insurer will pay the depreciation amount on the items that have been insured. There is a maximum number of times within the insurance term that the added benefits may be used. Without the add-on of zero depreciation in bike, all insurers factor in the depreciation cost and settle your claim after making adjusting depreciation. The zero depreciation add-on is an optional add-on not included by default in the comprehensive policy. Some insurance providers refer to zero depreciation coverage as add-on bumper-to-bumper coverage. Having the add-on cover will prevent any deductions for portion depreciation.

Why buy zero depreciation coverage?

For depreciation coverage, you may choose 0% depreciation cover. Your insurance premium may rise slightly, but this little expenditure will also help prevent your bike’s value from declining. This translates to more significant claim payouts and a higher market value for your bike.

  • Add-on offers comprehensive coverage:You will get an IDV comparable to your two wheeler’s market value due to the depreciation coverage. Better two wheeler insurance online coverage is possible because of it.
  • You can save a large sum of money:You can profit from a more significant claim since the insurer pays for the two wheelers repair irrespective of the depreciation rate. You will spend less money out of your wallet on bike repairs.
  • Enjoy the peacefulness of mind: It might be rather costly to repair broken parts on your brand-new luxury bike. When you buy zero depreciation cover, you can relax knowing that your insurer will protect you regardless of depreciation.

Inclusions:

  • Amount of reimbursement for bike components made of depreciable materials, such as nylon, rubber, fibreglass, and plastic.
  • Your bike insurance’s zero-depreciation protection applies to all claims as long as the insurance policy is in effect.
  • You may get zero depreciation cover on your renewal if you don’t already have it.

Exclusions:

  • Bikes older than five years are not eligible for this insurance.
  • It does not cover normal wear and tear or technical issues in your twowheeler or its components.
  • It does not cover your bike’s tyres, bi-fuel kit, or gas kit.

Rate of depreciation for your two wheeler

A bike’s age directly relates to how quickly a two wheeler depreciates. The bike’s rate of depreciation is as follows:

Age of the two-wheeler Rate of depreciation without zero depreciation cover
Below 6 months 0%
Between 6 months to a year 5%
Between 1 & 2 years 10%
Between 2 & 3 years 15%
Between 3 & 4 years 25%
Between 4 & 5 years 35%
Between 5 &10 years 40%
More than 10 years 50%
Parts of the Bike Depreciation rate without zero depreciation cover Depreciation rate with zero depreciation cover
Parts made of glass 100% 0%
Rubber or nylon or plastic parts or tyres and tubes, paintwork, batteries, and airbags 100% 50%
Parts made of fibreglass 100% 30%

 

Depreciation is a crucial factor in determining the bike’s IDV. The description makes it evident that your bike’s yearly depreciation rate significantly influences its insured value or IDV. This indicates that the IDV declines annually, lowering your online insurance’s premium, indemnity cap, and claims amount. This isn’t an ideal scenario since your bike’s worth will decrease. You can prevent this if you add zero depreciation in bike coverage to your comprehensive bike insurance online plan.

Your premium will go up, but in this way, the depreciation rate has no bearing on your compensation. This additional add-on aids in eliminating the impact of depreciation at the time of an insurance claim, increasing the insurance pay out. Make sure to choose this add-on while searching two wheeler insurance online.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.

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