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Know How Depreciation Can Affect Your Two Wheeler Insurance Premium

Published On Mar 12, 2022

What effect does depreciation have on your two-wheeler insurance? We'll go through how this works in detail in this article.

When buying bike insurance for your two-wheeler, it's usually a good idea to examine the different components of the policy to see which one is best for you. The depreciation rate, which is computed based on the Insured Declared Value, is one component that has a significant impact on the bike insurance price (IDV). We'll explain how it works in this post so you can make the best decision possible when picking a policy:

Know How Depreciation Can Affect Your Two Wheeler Insurance Premium

How Depreciation Affects the Cost of Two-Wheeler Insurance?

When purchasing bike insurance for your two-wheeler, it's a good idea to go over the various policy components to discover which one is best for you. One component that has a considerable influence on the bike insurance premium is the depreciation rate, which is calculated based on the Insured Declared Value (IDV).

How Does Depreciation Affect Insurance Premiums?

The IDV is the maximum amount your insurance provider will give you if your car is damaged or ruined. Simply said, the larger the IDV, the more expensive the insurance. As a result, the lower your IDV depreciates, the cheaper your insurance premium will be, as it signifies a decrease in the value of your vehicle and the amount the insurance company is required to pay you in the event of a claim.

What is the IDV (Insured Declared Value)?

The maximum the insurance will reimburse the policyholder for damages to their two-wheeler in the event of an accident is known as the insured declared value. The IDV is decided by the vehicle's market value rather than its purchase price. This indicates that the IDV of a two-wheeler depreciates each year, meaning that its worth declines. In other words, the depreciation rate influences how much the insurance will payout in the event of an accident.

What Effect Does the Depreciation Rate Have on the IDV and Premium?

The Insured Declared Value (IDV) of your two-wheeler decreases as it gets older due to depreciation. This, in turn, has an impact on the insurance policy's premium. As a result, as your bike becomes older, you will have to pay a lesser premium each year, but you will also receive a reduced payout in the event of an accident.

With Zero Depreciation Cover, you can protect your bike against depreciation?

The only option to prevent depreciation is to acquire a zero depreciation policy, which is offered as an add-on to standalone own-damage and comprehensive bike insurance policies. This add-on aids in the removal of depreciation from your bike and its many components.

What Effect Does Depreciation Have on IDV and Premium?

The insured stated value (IDV) of your two-wheeler will decrease as it gets older due to depreciation. As a result, the cost of insurance coverage will change. As a result, as your bike becomes older, you'll have to pay a lower annual premium, but you'll also receive a reduced reimbursement if you have an accident.

Add-On With No Depreciation

For a fee, you may add-ons to your comprehensive auto insurance policy, which are extra coverages that reinforce the safety net of your policy. Zero Depreciation is one such add-on that allows you to get the entire cost of replacement components at the time of claim, avoiding the impact of depreciation on your insurance company's reimbursement. This safeguards you against financial loss while you make a claim and get replacement components.

Take Away

In a nutshell, the depreciation rate has an impact on the bike's insured stated value (IDV). This means that the IDV decreases with each passing year, decreasing both the premium and the maximum compensation limit. You may, however, purchase a Zero Depreciation Cover to avoid this. It raises your premium, yet the depreciation has no effect on your compensation amount.

Also read - Learn Everything About Transferring Bike Insurance

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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