Let's understand the impact of depreciation on the cost of your two-wheeler insurance 18th January 2022
There are numerous factors to consider when buying two-wheeler insurance. While they may seem intimidating, they are not complex. You can quickly learn about them with access to relevant information. Today, we will discuss how depreciation affects your insurance premium.
After reading this blog, we ensure that you will get a good grasp of how depreciation affects the cost of your two-wheeler insurance. So let us guide you through it.
Firstly, what does depreciation mean?
Depreciation is calculated primarily on your two-wheeler's Insured Declared Value (IDV). It's the estimated market value determined by your insurer depending on the brand and model. So, depreciation is a drop in the IDV over time. It is caused by the wear and tear of the vehicle.
How will it affect your Insurance Premium?
The Insured Declared Value (IDV) is the entire amount that the insurer would pay you if your two-wheeler gets damaged. So, if your vehicle's IDV is high, your insurance premium will automatically increase. And if your IDV is low, your insurance cost will also be low. This implies that the insurance cost is directly proportional to the IDV.
How will your IDV be calculated if the age of the two-wheeler exceeds 5 years?
If your two-wheeler is more than 5 years old, your insurer will compute the IDV according to their criteria. In this instance, your insurance provider will make the final decision based on the condition of your two-wheeler and its components.
*Note: IDV depreciation will grow at a rate of 2.5% every year thereafter.
Insurance companies also have IDV calculators on their websites so that you buy two-wheeler insurance online. You have to enter your bike’s registration number and past insurance policy status and get a quote.
Want to know how add-ons help in this?
The answer is obtaining a zero depreciation add-on cover while buying insurance. Also known as a nil depreciation add-on, you can buy it at an added cost to enhance the insurance policy. It enables you to get the total cost of replacement of components at the time of claim and avoids the insurer's compensation from being reduced. It is an excellent feature to protect against damages while filing a claim and buying replacement components.
You can ask your insurance agent for this add-on. Moreover, you can get this add-on even when you buy two-wheeler insurance online without any intermediary.
Have you gained an insight into the working of the depreciation factor? The value of your bike starts decreasing the moment you take it out of the showroom. So, you need to undertake the security of your two-wheeler and assure hassle-free claim settlement at the time of mishaps.
We recommend getting a zero depreciation cover for your two-wheeled companion if you haven’t already and get the advantages of 0% depreciation coverage. Although it appears to be a little expensive in the premium, but it will help in more significant savings in the longer run. Be future-ready and buy two-wheeler insurance online to ensure the safety and longevity of your valuable two wheeler.
Click HERE to explore the plans and buy two wheeler insurance online right away.
Disclaimer: The information provided above is for illustrative purposes only. To get more details, please refer to policy wordings and prospectus before purchasing a policy.