Determining the extent of coverage is essential before buying insurance for your two-wheeler. Certain terms, such as zero depreciation cover and own damage bike insurance, may seem complex to understand. Both the covers will provide financial protection to your bike, but understanding the differences will help you make the right choice.
This guide outlines the key differences between own-damage and zero-depreciation bike insurance and highlights which provides higher coverage. Continue reading to learn more!
What is Own Damage Bike Insurance?
As per the relevant provisions of the Motor Vehicles Act 1988, all bike owners must have bike insurance with third-party cover, which only covers third-party liabilities. However, such plans do not cover damages to the owner’s bike.
In this regard, having your own damage bike insurance policy enables you to claim for repairs and replacement costs. The insurance provider will pay for damages caused by accidents, fire, theft, burglary, natural calamities, and man-made events. Also, you can opt for add-ons like invoice coverage and roadside assistance to enhance your base policy coverage.
What is Zero Depreciation Bike Insurance?
Zero depreciation is an add-on cover under a bike insurance policy. Under this coverage, the policyholder receives full reimbursement for the bike components without any deduction for depreciation costs. Since vehicles are depreciating assets, the insurer considers depreciation when policyholders file a claim.
In zero depreciation bike insurance100% of the claim is settled without depreciation deduction. It covers the depreciated value, ensuring full settlement for the policyholder, subject to other deductibles and policy terms.
Differences Between Own Damage Bike Insurance and Zero Depreciation Cover
Both the covers provide financial protection to bike owners against damage. Understanding the differences between the two will help you make the best choice. Here are the key differences:
|
Features
|
Own Damage Insurance Cover
|
Zero Depreciation Insurance Cover
|
|
Scope of Coverage
|
The bike owner gets compensation for bike damage, theft, or loss.
|
It provides the right to depreciation reimbursement for own damage repairs. This is only an optional add-on feature in the policy.
|
|
Rules of Depreciation
|
The insurance provider considers depreciation when settling claims for repairs or replacement. You will have to pay the cost of depreciation yourself.
|
There is no concept of depreciation under this clause. Hence, the insurance provider settles the full amount. You will have to choose this add-on cover separately.
|
|
Cost of Premium
|
The premium cost is less than a policy with a zero-depreciation cover add-on.
|
The cost of the premium is higher than basic third-party insurance. The marginal price increase is due to the additional cover.
|
|
Settlement of Claim
|
The claim is settled subject to the policy terms and conditions, alongside deducting depreciation costs.
|
This additional cover ensures that the full claim is settled without deducting the wear and tear costs.
|
|
Examples of Claim Settlement
|
If the insured faces an accident and files a claim of ₹2 lakhs, and the depreciation value of the parts is ₹30, 000, then under this insurance cover, the claim will be settled for ₹1, 70, 000, subject to other deductibles and policy terms.
|
However, under zero depreciation add-on cover, the entire claim will be settled without considering the deprecation of parts. Hence, the claim will be settled for ₹2 lakhs, subject to other deductibles and policy terms.
|
What Should You Choose: Own Damage Bike Insurance or Zero Depreciation Cover?
You should choose the bike insurance cover that best suits your needs. Here’s how to select the best cover:
Go for Own Damage Insurance Cover If:
- You already have a third-party cover and need coverage for damages to your own two-wheeler.
- You don’t want to pay extra marginal premiums for optional add-on covers.
- You can afford depreciation costs while making claims.
Opt for Zero Depreciation Cover If:
- You wish to seek extensive coverage for repair and replacement costs.
- You like to avoid bearing depreciation costs on bike components.
- You want a hassle-free claim settlement experience without the deduction of depreciation.
- You can afford to pay a higher premium at the moment.
Choose both the covers by taking into account these parameters:
- Age of Your Bike: If your bike is under 5 years of age, opting for a zero depreciation cover can help in getting a full settlement of claims, which can aid in savings.
- Your Claim History: Newbie buyers can avoid the optional add-on covers. If you have no claim history, you can opt for a own damage insurance cover, provided you have a third-party cover to meet the legal requirements.
- Budget: If you can afford a slightly higher premium, consider buying a zero depreciation cover, which will save you costs later.
Tips for Choosing an Optimal Policy
Here are a few tips to follow to make an informed choice about your bike insurance policy:
- Research and Compare: Don’t choose the first policy offered or suggested to you. Research well, find similar plans, and compare their terms and prices to select the best policy for your needs.
- Read Carefully: Before signing, read all the policy documents carefully to understand specific exclusions, deductibles, and the scope of coverage.
Overall, both own damage and zero depreciation bike insurance have their perks and cater to specific requirements. While own damage bike insurance covers the basic level of insured risks, zero depreciation cover adds an extra layer of financial protection, albeit for a slightly higher premium.
Evaluating your needs and understanding the key differences will help you make the right choice. Apart from this, practice safe riding habits to minimise claims and get lower premiums during renewals.
