As the owner of a two wheeler, you will come to realise that your pride and joy is a significant drain on your finances. From regular repairs and maintenance to unforeseen situations like accidents, you will have to shell out a tidy sum of money to keep your bike or scooter in good condition.
Having a comprehensive insurance plan is the best way to save on such expenses, as the plan covers such occurrences. However the natural order of things dictates that the older something gets, the lower its value becomes. This applies to your pride and joy of a two wheeler as well. Two wheelers reduce in worth as they get older as newer entrants enter the market. As a vehicle ages, it is also prone to wear and tear and damage.
Your two wheeler insurance policy will cover these damages. However as your bike ages, the insurance company levies what is known as depreciation cost, which reduces the amount you will receive when you make a claim for replacement of parts, etc. Every part associated with your two wheeler has an individual depreciation cost, which the insurance company will factor in before settling your claim.
Ageing of a vehicle is unavoidable, and the depreciation levied by the insurer is also unavoidable. Or is it? Insurers have now come up with an add-on cover termed as “Nil Depreciation”. This cover, which can be bought separately, negates the depreciation cost, resulting in you receiving the total amount claimed.
We tell you all you need to know about nil depreciation and whether it is an add-on cover worth investing in or not.
What is Nil Depreciation?
Nil Depreciation is an add-on cover offering full coverage for all parts without making depreciation deductions. The rate for nil depreciation for two wheelers is between 0 to 40% depending on the vehicle and other factors.
How does Nil Depreciation benefit customers?
- Nil depreciation reduces the amount you would have to pay for repairs and parts by covering the full cost of these. The following types of components and parts are covered by nil depreciation:
- It is applicable for both new as well as old vehicles. Nil depreciation cover is available for vehicles that are a maximum of 2 years old.
- Your out of pocket expenses are reduced as the insurance company covers the complete cost of insured components and repairs for your bike, as long as they are within the purview of the policy.
- Even if you opt for the basic insurance policy, nil depreciation would reduce the loss amount when your claim is being assessed.
Under what conditions can you avail Nil Depreciation Cover?
Nil depreciation cover is an add-on cover, which means you will have to pay over and above your regular insurance premium for this service. This would raise the cost of your premium payments, depending on the rate offered by the insurer for your bike.
Given below are a list of conditions under which you can avail of nil depreciation:
- The two wheeler is to be repaired at an authorised service center/ dealer/garage only.
- On average, nil depreciation cover can be claimed for a maximum of two claims during the term of the policy.
- Total loss in the form of theft or total damage are not covered under the nil depreciation policy.
What are the exclusions to Nil Depreciation cover?
Nil depreciation is a good add-on policy that helps ensure you don’t have to pay for replacement parts for your two wheeler, but there are certain exceptions which are not covered under the policy, which are given below:
- Normal wear and tear of the two wheeler
- Damage to parts that are not covered under the policy such as tyres and tyre tubes
- Damage caused by an uninsured occurrence.
Which factors affect Nil Depreciation premiums?
As stated above, the rates provided for nil depreciation cover varies from 0% to a whopping 40% depending on certain factors. Given below are the various factors that affect the premiums to be paid for this add-on policy:
- Age of the vehicle
- Model or variant of the vehicle
- Area of residence
Who should opt for Nil Depreciation?
To protect your two wheeler and to avoid paying for repairs from your own pocket, you should consider opting for Nil Depreciation cover if you’re any of the following:
- Live in an area prone to accidents
- Are a first time two wheeler vehicle owner
- You own a luxury bike, or one with expensive spare parts.