Understanding How Depreciation Can Affect Your Two-Wheeler Insurance Premium

What Is Depreciation Anyway?

Depreciation is the reduction in your bike's value over time due to aging, usage, and wear and tear—often unnoticed until it's too late. In the insurance world, depreciation is a key factor in determining the Insured Declared Value (IDV)—the maximum amount your insurer will pay if your bike is stolen or damaged beyond repair. The higher the depreciation, the lower the IDV.

The Numbers Game: How Depreciation Affects Your Premium

When calculating the Insured Declared Value (IDV) of your bike, insurers such as Jio Insurance Broking follow a standard depreciation schedule set by IRDAI:

• Less than 6 months – 5% depreciation
• 6 months to 1 year – 15% depreciation
• 1 to 2 years – 20% depreciatio
• 2 to 3 years – 30% depreciation
• 3 to 4 years – 40% depreciation
• 4 to 5 years – 50% depreciation
• Over 5 years – Depreciation is mutually decided and negotiated with the insurer

This means that as your bike ages, its depreciation increases—lowering the IDV, which in turn can reduce your Bike Insurance premium. But remember, lower premiums also mean lower payouts in case of claims.

IDV & Premium: The Invisible Balancing Act

IDV = (Current Market Value) – (Depreciation) + (Accessories - Depreciation on Accessories)—a formula that shows how depreciation directly trims down the value that can be claimed

For example, if your 1-year-old bike had an ex-showroom value of ₹1,00,000 and the depreciation is 20%, your IDV becomes ₹80,000. Naturally, your premium will be calculated on that reduced value.

The Advantage of Zero Depreciation Add-On

What if you could skip the depreciation deduction altogether? That’s where the zero depreciation or "nil-dep" add-on comes into play.

Why it’s worth considering:

• Full claim settlement: No deductions for depreciation on covered parts.
• Better protection for expensive bikes: Especially beneficial for high-end models with costly spare parts.
• Peace of mind: Drive stress-free without worrying about costly wear-and-tear claims.

However, this enhanced coverage comes with a higher premium—typically 15–20% more.

Keep in mind:

• Usually available for bikes up to 5 years old.
• Some policies cap the number of zero-dep claims per year.
• Regular wear-and-tear, theft, or mechanical breakdowns may not be covered.

Why Jio Broking Makes the Difference?

At Jio Insurance Broking, we understand that every bike and rider needs tailored coverage. Here’s how we make your two-wheeler insurance experience smoother:

1. Easy comparison: Explore plans with and without zero depreciation cover side by side.
2. Transparent quotes: See how depreciation impacts your IDV and premium at a glance.
3. Smart add-ons: Options like engine protection, roadside assistance, and zero depreciation are just a click away.
4. Streamlined claims: We simplify the process—from documentation to claim settlement.

Real-World Example: What Depreciation Translates To

Imagine Rajiv, who buys a used bike with an ex-showroom price of ₹1 lakh and insures it with a comprehensive two-wheeler policy.

• With standard depreciation (say 20% for a one-year-old bike), his IDV is ₹80,000. His premium is lower—but in case of damage, his insurer deducts depreciation when paying for claims.
• With a zero depreciation add-on, he pays a bit more upfront, but gets full reimbursement for parts—meaning lower unexpected expenses later.

So, What Should You Do?

1. Assess your needs: Is your bike new or high-value? Do you prefer to pay more now to avoid surprise costs later?
2. Compare via Jio Insurance Broking: Use our dashboard to view quotes, check depreciation, and opt for add-ons like zero dep.
3. Choose wisely: A balanced decision ensures affordability and adequate protection.

Depreciation may seem like a dry insurance concept, but it’s a powerful factor that dictates how much your insurer will pay—and how much you’ll spend in the event of a claim. Whether you go for a standard plan or opt for a zero depreciation add-on, being informed lets you ride with confidence.

With Jio Insurance Broking, you’re not just buying bike insurance—you’re choosing smart protection that flexes with your needs.