Most of the insurance claims are settled after deducting the depreciation amount. However, the zero-depreciation cover is an add-on that allows a policyholder to avail full compensation without any deduction. Read on to more about it.
Bikes depreciate over time, which means their value reduces as they get older. This reduction in value is known as depreciation. Therefore, when a policyholder filesa claim, the insurance provider deducts the depreciation amount from the coverage amount.
But, there is a way to avoid this depreciation factor by purchasing a zero-depreciation add-on. Most insurance companies offer this add-on to protect policyholders from out of pocket expenses. Under the cover, the insurer will pay the full damage amount without considering the depreciation factor.
Let’s look at an example to understand how this add-on works-
Mr Singh’s bike gets damaged in a road accident. He files for a claim to repair his motorcycle. The insurance company assesses the damage and concludes that the claim amount is Rs. 20,000.
The insurer then asks Mr Singh to pay Rs. 8,000 as depreciation amount. However, if Mr Singh has zero depreciation cover, then the insurer will pay the entire amount.
A zero-depreciation add-on cover is highly beneficial for all bike owners to keep their asset from unforeseen events. It is a highly recommended rider for:
- Inexperienced riders
- People who own an expensive sports bike
- People living in accident-prone areas
- People who worry about small dents and scratches on their bike
Different between a Bike Insurance Policy with Zero-Depreciation and a Standard Insurance Policy
Standard insurance policy is cheaper compared to zero depreciation cover. However, zero depreciation add-on can prove to be a good option in the longer run.
- Claim Settlement
If a standard insurance policyholder files for a claim, then the insurer deducts the depreciation amount from the coverage amount. However, no such deduction will be levied on policyholders who have a zero-depreciation cover.
Inclusions of Zero Depreciation Cover
- Two-wheeler insurance policyholdersare allowed to renew zero-depreciation cover for their vehicles. However, renewal can be availed only up to a particular age.
- Depreciable items like nylon, fibreglass, plastic parts and rubber will be compensated.
- Most insurance companies set a limit on the number of claims a policyholder can make during a term with zero-depreciation cover. This limit varies from insurer to insurer.
Exclusions of Zero Depreciation Cover
- Total loss or theft of the vehicle will not be covered.
- The insurance companies don’t cover damage due to uninsured peril.
- Any damage to uninsured parts like tires and gas kits will not be covered.
- Damage caused due to mechanical breakdown is not covered.
Conditions You Need to Remember While Availing Zero-Depreciation Cover
- To avail this cover, an insured person must repair his/her bike at a network garage.
- Zero depreciation cover can only be availed for a specific number of times during a policy’s term.
These conditions may vary from one insurance company to another. Make sure you read them before purchasing the add-on.
In conclusion, zero-depreciation cover enhances the overall protection provided by two-wheeler insurance.