Understanding How Depreciation Can Affect Your Two Wheeler Insurance Premium

10 Nov 2021

Every commodity goes through value depreciation with time and use. The same holds true for your bike. The market price of your two wheeler decreases as it gets old and suffers from wear and tear. The zero depreciation bike insurance cover can help protect you from heavy expenses that you may face during claims due to depreciation costs. Before you learn more about this helpful add-on, it is important to understand how depreciation affects the premium of your two wheeler insurance policy.

How is the rate of depreciation determined for your bike?

The age of your two wheeler is directly proportional to the rate of depreciation it faces. The value of your bike starts to decrease as soon as it is out of the showroom. The best way to avoid this is by buying a zero depreciation bike insurance cover.

To give you a better understanding of how the value of your bike depreciates over time, here is a table that shows the depreciation percentage in correspondence to the vehicle’s age.

Age of the two wheeler	Rate of depreciation
Below 6 months	0%
Between 6 months to a year	5%
Between 1 & 2 years	10%
Between 2 & 3 years	15%
Between 3 & 4 years	25%
Between 4 & 5 years	35%
Between 5 &10 years	40%
More than 10 years	50%

Why is understanding depreciation important?

The IDV of your bike insurance policy is the maximum amount of money that the insurer will cover you for in the event of a total loss or theft of your vehicle. In layman terms, it is the current market value of your bike. It depends on many factors, like the brand of your bike, its make and model, etc. Depreciation is also one among the considered factors.

Now you may wonder how depreciation affects two wheeler insurance premium. Depreciation decreases the premium you pay; however, bear in mind that your IDV also reduces. The rate of depreciation is, thus, inversely proportional to the IDV offered by your insurer. The higher the depreciation rate of your two wheeler, the lower the IDV. You can avoid such a decrease in the IDV of your bike by getting the zero depreciation two wheeler insurance add-on.

What are the benefits of buying a zero depreciation cover?

• You get to enjoy better coverage:- With the help of a zero depreciation cover, you get to enjoy an IDV that is nearly equal to the market price of your two wheeler. As a result of this, you get to enjoy better coverage.
• You get to save a significant amount:- Since the insurer pays for repairing your bike without considering its rate of depreciation, you get to enjoy a higher claim amount. This brings down the amount you need to pay for repairing your bike from your pocket.
• You enjoy complete peace of mind:- Repairing the damages caused to the parts of your newly bought luxury bike can be quite expensive. With the zero depreciation cover, you can enjoy complete peace of mind, knowing the insurer will cover you without considering depreciation.

Disclaimer: For more details on risk factors, terms & conditions please read sales brochure carefully before concluding a sale. *The discount amount will vary subject to vehicle specification and place of registration.