Two-wheeler Insurance Premiums and Depreciation: The Relationship Explained

The value of every commodity depreciates as we use it over time. The same is true for your two-wheeler. Its market value decreases as it ages with time and suffers from wear and tear.

The zero-depreciation bike insurance policy can protect you from significant expenses incurred during claims due to depreciation costs. To learn more about this helpful add-on, you should first understand how depreciation affects your two-wheeler insurance premium amount.

How is the rate of depreciation for your bike calculated?

The rate of depreciation on your two-wheeler is directly proportional to its age. As soon as it leaves the showroom, its value begins to decline. The best way to solve this could be to purchase zero-depreciation motorcycle insurance if you have a bike or zero-depreciation scooty insurance in case of a scooty.

The following table shows the depreciation percentage in relation to the two-wheeler’s age:

Age of your two wheeler                           Rate of depreciation
Less than 6 months 0%
From six months to a year 5%
From 1 year 1 day up to 2 years 10%
From 2 years 1 day up to 3 years 15%
From 3 years 1 day up to 4 years 25%
From 4 years 1 day up to 5 years 35%
From 5 years 1 day up to 10 years 40%
More than 10 years 50%

Why is it essential to understand depreciation?

The IDV (Insured Declared Value) of your bike insurance policy is the maximum amount the insurer would pay you if your two-wheeler gets stolen or totalled. It is the current market value of your bike in layman’s terms.

Many considerations come into play, such as the brand of your two-wheeler, its make and model, etc. in determining the IDV. Depreciation is also one of the factors being considered. *

How does depreciation affect the cost of two-wheeler insurance? 

Depreciation lowers your premium; however, keep in mind that your IDV decreases too. As a result, the depreciation rate is inversely proportional to the IDV provided by your insurer. You can avoid such a decrease in your bike’s IDV by purchasing the zero-depreciation add-on. *

What are the advantages of purchasing a zerodepreciation policy?

  1. Better coverage: With a zero-depreciation policy, you can enjoy an IDV nearly equal to your two-wheeler’s market value. You will hence have improved coverage.
  2. Save money on repair: Since the insurer pays for repairing your two-wheeler without considering its depreciation rate, you get a more considerable claim amount. This reduces the amount you need to pay out of pocket to repair your two-wheeler.
  3. Peace of mind: Repairing the damages for your newly purchased luxury two-wheeler parts can be pretty costly. With zero-depreciation coverage, you can have complete peace of mind knowing that the insurer would cover you regardless of depreciation.

* Standard T&C Apply

Knowing about depreciation can help you choose options that will lessen its effects and understand how it impacts your two-wheeler insurance. Remember to check variables other than depreciation for new bike insurance on the websites of insurance companies.

Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.

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