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Depreciation Impacts Two Wheeler Insurance Premium Explained

Written by Sharad Bajaj
Updated On Oct 29, 20202 min read

​There are a number of factors which come into play when you are purchasing insurance for your two-wheeler. Depreciation, which is perhaps the most important insurance variable, and how it will impact your insurance premium for your two wheeler.

There are a number of factors which come into play when you are purchasing two-wheeler insurance. The different variables that will impact your insurance premium can seem daunting at first, but in fact purchasing and understanding insurance is a simple and easy process. Read on to learn about Depreciation, which is perhaps the most important insurance variable, and how it will impact your insurance premium for your two wheeler.

What is Depreciation?

Depreciation is based on the IDV (Insured Declared Value) of your two wheeler, which refers to the assessed market value as determined by your bike insurance company based on the make and model of the vehicle. Depreciation is therefore nothing but the reduction in the IDV over time, based on ageing of the two wheeler as well as regular wear and tear, which is also assessed and determined by the insurance company.

Also Read: Bike Insurance Details by Registration Number

How Does Depreciation Impact the Insurance Premium?

The IDV is nothing but the sum total that the insurance company would pay to you in case of damage or total loss of your vehicle. Simply put, the higher the IDV, the higher the insurance premium. Therefore, the more that your IDV depreciates, the lower your insurance premium would be also, as it would represent a reduction in the value of your vehicle and a reduction in the amount that the insurance company would have to pay to you in case of claims.

Also Read: Fine for Driving Two Wheeler Without Insurance

In case of a small accident if some parts need to be replaced rather than the whole bike or two wheeler, you would be compensated for the same according to IDV rather than the actual price of the new parts. Therefore depreciation can have a negative impact upon you and lead to losses. Let’s read all about how it is possible to avoid this.

Zero Depreciation Add-on

When purchasing comprehensive motor insurance, you are able to purchase add-ons which are additional coverages to strengthen the safety net of your insurance policy, available at an additional premium. One such add-on is Zero Depreciation, which allows you to avail of the full price of replacement parts at the time of claim and prevents your compensation from the insurance company from being impacted by the depreciation in the value of the parts. This protects you against losses at the time of raising a claim and purchasing new parts.

Also Read: How to Get Duplicate Two Wheeler Insurance Copy Online


Depreciation therefore impacts your two wheeler insurance premium in a considerable way. The higher the depreciation, the lower the premium you would have to pay. However, this can lead to losses at the time of claims, and so it is possible to purchase an add-on cover known as Zero Depreciation to protect yourself against these losses.

Types of Bike Insurance You Should Know:

Third Party Two Wheeler Insurance

Comprehensive Two Wheeler Insurance Policy

You May Also Like To Read:

Own Damage Two Wheeler Insurance

Two Wheeler Insurance Add-ons

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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Written by Sharad Bajaj
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 Sharad is an insurance industry veteran who has managed motor insurance products for over a decade. He helped set up and scale the motor insurance vertical for a leading insurance company in his previous stint. In his spare time, Sharad likes to read and be in tune with nature.

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