When purchasing insurance for your two-wheeler, it’s common to encounter terms like Own Damage Cover and Zero Depreciation Bike Insurance. Both offer financial security for your bike, but understanding the differences between them will help you make an informed choice. This blog will reveal the detailed differences between Own Damage and Zero Depreciation covers and which one will be suitable for you.
What is Two-Wheeler Own Damage Insurance?
A bike insurance policy helps to cover expenses that may occur due to vehicular damage. The policy you choose determines whether you will receive coverage for that particular damage or not. According to the Motor Vehicles Act of 1988, every bike owner is required to have third-party cover, which only covers third-party liabilities.
However, if you select Own Damage insurance for your bike, the insurer will pay for damages arising from accidents, fire, theft, burglary, natural calamities, man-made events, and so on. To get reimbursement for repair expenses and replacement costs for parts damaged due to any insurable risk, it is necessary to take a standalone Own Damage bike insurance policy, excluding the third-party bike insurance. When buying this insurance, you can also opt for additional add-on covers like Zero Depreciation, invoice cover, etc., to get better coverage.
What is Zero Depreciation Bike Insurance?
Zero Depreciation is an add-on cover in a bike insurance policy that provides full reimbursement for parts and components of the bike without factoring in the depreciation cost. Comprehensive bike insurance comes with the additional option of Zero Depreciation cover that you can opt for.
In a normal claim settlement, an insurer will offset the price of depreciated parts that are to be replaced. However, with Zero Depreciation insurance, no such deduction is made, and a 100% claim is given. Since vehicles are depreciating assets, the value of the bike decreases over time, a process referred to as depreciation. Zero Depreciation insurance covers the depreciated value, ensuring there is no deduction for depreciation during a claim, and the insured gets the full settlement as per the policy conditions.
Differences Between Own Damage Insurance Cover and Zero Depreciation
While both covers offer financial safety nets, understanding how they differ helps choose what’s best for you.
| Aspect | Own Damage Insurance Cover | Zero Depreciation Insurance Cover |
|---|---|---|
| Scope of Coverage | Compensation for the bike owner if the bike is damaged, stolen, or lost. | Limited cover, excluding depreciation on own damage repairs. Optional add-on. |
| Depreciation Rules | Insurance company applies depreciation to parts in case of replacement. | Insurer eliminates the concept of depreciation, providing full claim amount. |
| Premium Costs | Generally lower compared to Zero Dep cover. | Involves a marginal extra premium over basic third-party insurance. |
| Claim Settlement | Claim amount paid according to policy terms and conditions. | Ensures the actual amount is paid without reduction due to wear and tear. |
Examples of Claim Settlement
- Own Damage Cover: If the insured files a claim for Rs. 2 lakhs and the depreciation value of the parts is Rs. 30,000, the claim will be settled for Rs. 1.7 lakhs, subject to other deductibles and policy conditions.
- Zero Depreciation Cover: For the same claim of Rs. 2 lakhs, the entire claim would be settled without considering the parts’ depreciation, resulting in a settlement of Rs. 2 lakhs, subject to other deductibles and policy conditions.
Which is More Advantageous?
Your insurance needs determine which cover suits you better:
- Opt for Two-Wheeler Own Damage Cover if:
- You want basic legal protection on the financial aspect.
- You are not keen on paying extra premiums for add-on covers.
- You can absorb depreciation costs when making claims.
- Choose Zero Dep if:
- You seek broader coverage for repair expenses.
- You prefer to avoid claiming depreciation on parts.
- You want easier claim processing without depreciation deductions.
- Consider Both Covers Based on:
- Bike’s Age: Older bikes benefit most from Zero Dep.
- Claim History: First-time buyers might avoid these peripherals.
- Budget: Include Zero Dep if the premium hike is manageable.
Additional Bike Insurance Considerations
While protecting your bike from damage and depreciation is essential, it’s important to look at the broader picture of insurance:
- Third-Party Bike Insurance: Mandatory in India, it covers legal liability for damages caused to third parties due to an accident.
- Personal Accident Cover: Provides financial protection to the rider in case of death or disability due to an accident.
- Additional Add-Ons: Enhance your coverage with options like roadside assistance, key replacement, and helmet cover.
Tips for an Optimal Policy
- Compare and Contrast: Research and compare various plans to choose the best one.
- Read the Fine Print: Understand terms, conditions, exclusions, deductibles, and coverage limitations.
- Stay Connected: Inform your insurer of any changes regarding the bike, such as new ownership or modifications.
- Mind Your Miles: Safe riding practices can positively impact your premium levels.
Conclusion
Own Damage forms the basic level of your bike insurance, while Zero Depreciation adds an extra layer of protection. Evaluating both covers helps you choose the best option based on your priorities. Ensure your bike is adequately covered without unnecessary add-ons, and consider your needs, bike age, claim history, and budget to make an informed decision.
By understanding these options and utilizing the convenience of bike insurance online, you can ensure comprehensive protection for your two-wheeler, providing peace of mind and financial security.