Zero depreciation insurance, also known as "zero dep," ensures you receive the full claim amount for your bike without deductions for depreciation. This cover is crucial for protecting your bike's value and can save you money in the long run. By adding it to your comprehensive insurance plan, you ensure complete protection and peace of mind in case of damage or loss.
When it comes to protecting your bike, having the right insurance coverage is crucial. One type of coverage that is often recommended is zero depreciation or "zero dep" insurance. But what exactly is zero depreciation in bike insurance and how does it work? In this article, we will explore the concept of zero depreciation and its benefits for bike owners.
Understanding Depreciation
Before we dive into zero depreciation, it's important to understand the concept of depreciation. Depreciation is the decrease in the value of an asset over time due to wear and tear, age, and other factors. In the case of a bike, depreciation can occur due to regular use, accidents, and natural disasters. This means that the value of your bike decreases with each passing year, making it difficult to get a fair claim amount in case of damage or loss.
What is Zero Depreciation in Bike Insurance?
Zero depreciation, also known as "zero dep" or "depreciation insurance," is an add-on cover that can be included in your comprehensive bike insurance plan. This cover ensures that you receive the full claim amount without any deduction for depreciation in case of damage or loss of your bike. This means that you will receive the full value of your bike at the time of purchase, without taking into account its current depreciated value.
Benefits of Zero Depreciation Coverage
The main benefit of zero depreciation coverage is that it provides complete protection for your bike. With this cover, you won't have to worry about the depreciated value of your bike affecting your claim amount. This is especially beneficial for new bikes or bikes that are less than three years old, as they tend to have a higher depreciated value. Another advantage of zero depreciation coverage is that it can save you money in the long run. Without this cover, you may have to pay for the depreciated value of your bike out of pocket, which can be a significant amount. With zero depreciation coverage, you can avoid this expense and receive the full claim amount.
Depreciation in Bike Insurance
The cost of repair or replacement of bike's metal, plastic, nylon, rubber and such other depreciable parts are not fully covered. The depreciated cost of such parts must be borne by the policyholder at the time of claims.
The depreciated cost that a policyholder pays varies with the material. The following table shows the percentage that a policyholder will pay in case of repair or replacement at the time of claims:
| Depreciable Bike Parts | Depreciated Cost (% of total cost) |
|---|---|
| Rubber, Nylon, Plastic | 50% |
| Fiber-glass | 30% |
| Tyre(s) and Tube(s) | 50% |
| Glass | 0% |
Consider a case where there is a need to replace bike's nylon parts. Only 50% of the cost will be paid by the insurance company and the rest of the cost will be paid by the policyholder.
But...if you have a zero depreciation add-on cover, you don't have to pay a penny for such depreciable parts.
Know the difference between a comprehensive policy and zero depreciation insurance for bike
Here’s the table that shows clearly the differences between a comprehensive policy with and without a zero depreciation add-on cover.
| Differentiating Points | Comprehensive Policy with Zero Depreciation | Comprehensive Policy without Zero Depreciation |
|---|---|---|
| Claim Amount | Full payment of garage bills | Deduction according to the depreciation |
| Cost of Depreciable Parts | Full payment | Partially paid |
| Premiums Cost | Comparatively higher | Comparatively lower than with zero dep add-on cover |
| Savings at the time of claims | Saving on all the repair/replacement cost of depreciable parts | Need to pay depreciable cost depending on the type of depreciable material |
Difference between a comprehensive policy with zero dep cover and without zero dep cover
Consider a bike having an IDV as Rs. 58,870. The premium for a comprehensive policy is Rs. 1,285 and comprehensive policy with a zero depreciation cover is Rs. 1,635 (i.e. just Rs. 350 extra).
The total repair cost comes up as Rs. 4,000 including repair and replacement cost of depreciable parts as Rs.800.
| Points | Without Zero Depreciation add-on cover | With Zero Depreciation add-on cover |
|---|---|---|
| Policy Premium | Rs. 1,285 | Rs. 1,635 |
| Depreciable Repair Cost | Rs. 800 | Rs. 0 |
| Total Repair Cost Company Pays | Rs. 3200 | Rs. 4000 |
| Total Money Invested | Rs. 1,285 + Rs. 800 = Rs. 2085 | Rs. 1635 |
| Savings | Rs. 0 | Rs. 450 |
This is where the real value of zero depreciation add-on cover in bike insurance comes into picture. As you can see that the zero depreciation cover helps in saving money at the time of claims, because the insurance company pays the cost of depreciable parts.
The above example shows a saving of Rs.450, those figures are indicative and subject to change with respect to various factors.
How to Get Zero Depreciation Cover for Your Bike
If you want to add zero depreciation coverage to your bike insurance plan, you can do so by opting for a comprehensive plan. This type of plan provides coverage for both third-party liability and own damage, and you can add zero depreciation as an add-on cover. Keep in mind that this cover may come at an additional cost, but the benefits it provides can be well worth it.
Conclusion
In conclusion, zero depreciation in bike insurance is an add-on cover that provides complete protection for your bike without taking into account its depreciated value. This cover can save you money and provide peace of mind in case of damage or loss of your bike. If you want to ensure that your bike is fully protected, consider adding zero depreciation coverage to your comprehensive bike insurance plan.
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Here's all you need to know about Zero Depreciation Bike Insurance.
