Unlike land and property, a two-wheeler or a car is a depreciating asset meaning its value decreases with time. Any two-wheeler owner knows that normal wear and tear of the vehicle with time is unavoidable. Also, with rising costs, purchasing a two wheeler has become quite a costly affair. In case of damage to the vehicle due to an accident or a road mishap, the costs of repairs can also prove to be expensive. A comprehensive two wheeler insurance cover can guard you against sudden expenses related to your vehicle.
When it comes to two wheeler insurance, most of the insurance companies offer add-on covers in addition to package and third-party covers. Insurance companies have come up with the concept of Nil Depreciation add-on cover for two-wheelers that will shield you from the depreciation factor when filing a claim. Read on to find more about how a zero depreciation cover will benefit the policyholders and its advantages.
How will a policyholder benefit from a zero-depreciation cover?
Mr.Raghu had duly filed for an insurance claim after his two-wheeler met with an accident. But, he was shocked to learn that instead of getting a compensation of Rs.1 lakh towards the damages, he was paid 30% less by his insurer. Because Mr.Raghu had purchased a standard insurance policy for two wheelers, he got the claim compensation after a standard deduction of depreciation. If he had purchased a zero-depreciation cover, he would have got the entire amount as compensation.
What exactly is a zero-depreciation cover?
Depreciation refers to the decrease in an asset’s value with time due to use. For example, a new car is valued more than a car that was purchased in 2006. All insurers take the depreciation factor into consideration while calculating the compensation. Hence, a standard plan gives you the claim amount after subtracting the cost of depreciation.
The advantage with a zero-depreciation plan is that it offers full coverage for the concerned automobile part without any deduction for depreciation. While the depreciation rate in standard two-wheeler policies vary between 0% to 40%, a zero-depreciation plan will help you claim the full amount.
What does the Zero-Depreciation Cover Include?
This add-on cover provided by most of the insurance companies offers coverage on plastic, rubber, nylon and fiberglass parts. This add-on cover can be availed for brand new vehicles and also can be opted for at the time of renewal. This zero-depreciation add-on cover is designed for bikes with a maximum age of up to 2 years and is valid for up to 2 claims during the period of the policy.
What is not covered in a Zero-Depreciation Policy?
The following conditions are excluded from the zero depreciation policy.
- Damage due to an uninsured peril.
- Damage to items that are uninsured like bi-fuel kit, tyres and gas kits.
- Normal wear and tear.
- Damage due to mechanical breakdown.
The tenure of most zero-depreciation covers in the market is one year and the policyholder must renew it annually to enjoy the benefits. If you do not have a zero-depreciation cover, you can buy it along with the two-wheeler insurance or opt for it while renewing your policy.
Conditions for availing the Zero-Depreciation Cover
It is very important that you read the policy wordings carefully and understand the conditions associated with each cover. A zero-depreciation cover comes with the following conditions in most of the cases.
- If the two-wheeler is completely damaged or is stolen, the zero-depreciation cover is not applicable.
- This cover can be availed only twice during the policy term.
- In case of damage due to an accident, the two-wheeler must be repaired in network garages that has partnered with the insurer.
These conditions may vary based on the insurer. Do enquire with your insurance provider to know more about the terms and conditions for zero depreciation cover.
Benefits of Zero-Depreciation Insurance Plan
The policyholder gets the following benefits with a zero-depreciation add-on cover.
- Since no cost of depreciation will be charged if you make a claim, you will not have to make any out-of-pocket expenses.
- Most of your claims regarding the insured parts are settled without taking the depreciation into consideration.
- It adds more value to the basic two-wheeler insurance cover and makes your investment on the two-wheeler almost nil.
With this cover, you can be assured of a complete peace of mind as you will not have to burn your pockets in case of an unfortunate event. Also, with all major insurers offering this cover, you can save yourself a lot of hassles by purchasing a nil-depreciation cover and by paying a little extra premium.
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