Understand bike insurance depreciation coverage for parts and difference between comprehensive and depreciation cover. Get details from Kotak General Insurance.
Like all types of machinery, even the value of bikes and their parts depreciate over time. And the cost of replacing these depreciated parts is not always covered under the Bike insurance policy. Read to know more about the role of depreciation on your claim settlement for bike parts.
The primary reason to buy a bike insurance policy other than abiding by the legal formalities is to secure your bike from any financial liabilities. Considering this factor, it becomes paramount to know about depreciation while calculating your bike insurance coverage. Depreciation is the reduction in the vehicle's actual value over time due to wear and tear. This is why the insurance companies do not cover the cost of depreciating parts or normal wear and tear.
Let's understand with an example:
Suppose you bought your bike atRs.80,000, but now the current value of the same bike isRs.50,000, which means your bike has suffered a depreciation ofRs.30,000. The current market value of your motorcycle is calculated based on the IDV(insured declared value).
The IDV is the amount that the insurance provider agrees to pay you on the total loss of your bike, i.e., either the bike is damaged beyond repair or stolen. So if your bike suffers any damage and requires repairing or replacing the parts, the reimbursement will be decided basis the IDV of your bike and not the cost of replacing the parts.
Below are the depreciating rates fixed by IRDAI to calculate IDV and ensure the right coverage for your bike during claims settlement.
Age of the Bike
Percentage of depreciation
Upto 6 months
Above 6 months to less than 1 year
1 year to below 2 years
2 years to below 3 years
3 years to below 4 years
4 years to below 5 years
However, if you have a zero depreciation add-on cover, you can claim the entire amount without paying a single penny from your pocket.
A depreciation add-on cover is an addition to your existing comprehensive bike insurance policy that helps you get the full claim settlement amount without deducting any depreciating values.
This depreciation coverage is a perfect add-on if you have recently purchased your bike or at least if your bike is less than five years old.
A comprehensive insurance policy deducts the depreciated value of the bike and parts during claim settlement, while a zero depreciation add-on pays out the entire amount.
So if you have a bike less than five years old, buying a zero depreciation add-on with your comprehensive insurance policy is wise to ensure complete coverage for your bike and its parts. Also, purchasing this add-on cover gives you peace of mind as you do not have to pay any percentage deductibles while getting the entire payment for garage bill repairs.