Bikes depreciate due to wear and tear, diminishing in value over time. When selling after five years, the price received is a fraction of the original. Comprehensive insurance covers damages, assessing the bike’s market value for settlement. Third-party insurance covers liabilities without considering the bike’s market value, impacting neither the policy nor the premium. *
Let’s first review the idea of IDV before examining how depreciation affects bike insurance costs.
IDV: What Is It?
The current market value of your bike is its Insured Declared Value (IDV). IDV represents the sum paid by the insurance company in the event of a total loss, considering factors like depreciation due to age and wear and tear.
Depreciation’s Effect On The Cost Of Two-Wheeler Insurance
A lower IDV results from the increasing depreciation rate. As a result, if the insured bike is completely lost, the insurer will provide less compensation. This directly affects the two-wheeler bike insurance policy premium. A lower premium is the outcome of a lower IDV.
Consequently, the premium for your bike insurance policy drops as your bike’s rate of depreciation rises.
What Is The Bike Depreciation Rate?
The Insurance Regulatory and Development Authority of India (IRDAI) has established the depreciation rates for two-wheelers in India. This is determined by the vehicle’s age, as explained below #:
| Age of the bike | Two Wheeler Depreciation Rate |
| Under 6 months | 5% |
| Between 6 months and a year | 15% |
| Between 1 and 2 years | 20% |
| Between 2 and 3 years | 30% |
| Between 3 and 4 years | 40% |
| Between 4 and 5 years | 50% |
| Over 5 years | IDV decided by Insurance Company and Individual |
Furthermore, as explained below, the IRDAI has established precise guidelines for determining the depreciation rate of various bike parts. #
| Parts of the two-wheeler | Depreciation Rate |
| Rubber, plastic, or nylon | 50% |
| Batteries, tyres, and tubes | 50% |
| Fibreglass parts | 30% |
What Does A Two-Wheeler Insurance Policy’s Zero Depreciation Rider Mean?
There are many add-on covers for enhanced protection and online two-wheeler insurance. The options include standalone own-damage, comprehensive, and third-party Bajaj Allianz two-wheeler insurance. The Zero Depreciation add-on ensures the policyholder receives the full claim amount without depreciation deduction, guaranteeing maximum reimbursement and minimal out-of-pocket costs. *
The zero-depreciation cover does, however, have specific exclusions. Under the zero-depreciation rider, some insurers only permit a certain number of claims to be filed annually. Before purchasing the additional coverage, make sure you check with the insurer. *
- It excludes coverage for bike damage brought on by typical wear and tear.
- If the bike is reported stolen or as a total loss or constructive total loss, there are no benefits.
Generally, bike damage from accidents alone is covered.
Depreciation plays a crucial role in determining a two-wheeler’s Insured Declared Value (IDV), impacting the premium for the insurance policy. Higher depreciation rates result in lower IDV and policy premiums. Opting for a zero depreciation add-on cover while slightly increasing the premium ensures maximum coverage without depreciation deductions during claims. Make sure you do your Bajaj Allianz bike insurance renewal process on time.
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*Standard T&C Apply
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.