Two Wheeler Bike Insurance 248 views September 12, 2019

Depreciation Effects on Bike Insurance Premium

Effects of Depreciation on Your Two Wheeler Insurance Premium

As soon as your bike leaves the dealer’s showroom, it stops being brand new and begins to depreciate in value. This happens due to a clause in motor insurance known as the insured declared value, or the IDV. The insurance companies decide the IDV value of each vehicle. All further bike insurance details, beginning from the insurance premium to the insurance claim amount become dependent on the IDV. Let us take a look at this in more details in the points mentioned below.

How depreciation affects two-wheeler insurance

When looking to insure your bike or scooter, it is very important for you to read the insurance policy wordings very closely. While you look at them, you will notice the IDV very clearly mentioned. The IDV is calculated by the motor insurance companies in India in the following way:-

Age of vehicle IDV percentage
6 months 5%
Between 1 and 2 years 20%
Between 2 and 3 years 30%
Between 3 and 4 years 40%
Between 4 and 5 years 50%

This means that you can get your bike insurance claim amount settled after the insurance provider deducts the IDV. You, therefore, won’t get the full insurance claim amount and a large part of it may have to be paid by you.

Combating depreciation in bike insurance

You cannot do a lot about the IDV clause in vehicle insurance. However, to ensure you minimize your financial liabilities during a motor insurance claim, you can get a very helpful tool known as the zero depreciation bike insurance rider. This rider helps you to stay one step ahead in the game. When you pay a slightly higher insurance premium and get the zero depreciation rider, your insurer promises to make the depreciation amount nil. You, therefore, get the full bike insurance claim amount, irrespective of how old your vehicle is. This is indeed a very helpful add-on cover you can get with your comprehensive two-wheeler insurance policy.

Reasons why you need a zero depreciation cover

Here are some of the most helpful ways in which you can use a zero depreciation vehicle insurance rider:-

Covers a new bike

If you have a new bike, you have no option but to opt for a zero depreciation bike insurance rider. You must get the rider as a new bike is valuable and precious. If something happens to the bike, you should get the full support of your insurance provider to get it back to its original state. So opt for this rider when you are buying a new vehicle insurance plan for your brand new two-wheeler.

Covers an expensive bike

Again, if you have an expensive bike, it is a and no-brainer that you need a zero depreciation two-wheeler insurance rider. You cannot afford to get only a partial insurance claim amount for damages incurred by your expensive sports bike. You need full compensation at all times. So do opt for this bike insurance rider if you own an expensive, imported bike.

Covers the expensive parts

An expensive bike has equally expensive spare parts like the mirror, the clutch, etc. The IDV of a vehicle applies not just to the bike, but also to the different parts of the bike. You, therefore, need to get a zero depreciation bike insurance rider when you have an expensive or new bike with equally expensive spare parts.

Helps during theft/damage

This is another important reason why you should opt for a zero depreciation motor insurance rider. If your bike gets stolen or damaged beyond repair, you get the compensation after the IDV is calculated. This can be very harmful. If the bike is older, the insurance compensation may be too less for you to replace the vehicle. So get a zero depreciation rider and stay assured of getting a proper and sufficient bike insurance claim amount if your vehicle is stolen or completely damaged.

Keeps the bike healthy

And finally, with the zero depreciation vehicle insurance rider, you can keep your bike in a good and healthy condition at all times. This is helpful because you get the full amount of the insurance claim. With that, you can change the parts that function poorly and keep the bike working well.

These are some very logical reasons why you need to get a zero depreciation motor vehicle insurance rider.

Getting the Two Wheeler Bike Insurance rider

You can buy a zero depreciation rider when you buy a brand new bike insurance plan. This is because you need good insurance coverage that is wholesome in every possible manner. Do your research and choose the riders carefully, including the zero depreciation rider. You will then have a good motor insurance cover and stay protected in a comprehensive manner.