Key differences between third-party, comprehensive and no-depreciation bike insurance cover – Blogs News, Firstpost

Prepare to clear your mind, because this article is about giving up all your dilemmas.

We often find ourselves at a crossroads when it comes to choosing an ideal bicycle insurance policy, which can adapt to both budget and requirements. Well, who doesn’t want the best for their bike? The confusion is real; especially when you don’t understand the tiny differences between the myriad of options. Prepare to clear your mind, because this article is about giving up all your dilemmas.

Before we get into the differences, let’s understand that there are two broad categories of two-wheeler insurance, based on coverage – liability insurance and comprehensive insurance. Let’s find out about them, their add-ons and their limitations.

What is two-wheeler liability insurance?

Also called ‘act only’ insurance, in this case the company covers damage caused to the third party in the event of an accident, collision or damage.* The insured bicycle and person are protected from legal obligations towards the third party, which is also involved. The main objective of this bicycle insurance is to protect you against loss and damage related to third parties and that is exactly what it provides, in addition to covering you in the eyes of the law.* It is compulsory to have at least this insurance, if you want to drive legally on the road. And honestly, when that insurance is cheaper than fines for driving without insurance, who would choose the latter?*

* Terms and conditions apply

Limits of third-party bicycle insurance

The sad truth about this offer is that it does not cover damage or loss to your bike; whether they come from an accident, a collision, a fire or even a natural calamity. Also, there is no way to customize your bicycle insurance policy with add-ons, IDVs or coverages. Theft is also not compensated.

For cyclists, securing their own bikes is primitive. Thus, most people opt for personal damage insurance rather than liability insurance. This brings us to comprehensive bike insurance which combines liability coverage with personal damage coverage.

What is all-risk two-wheeler insurance?

As the name suggests, comprehensive insurance is a complete package for the well-being of your bike. It incorporates third party damage coverage as well as damage to your bike in the event of unfortunate events such as theft, accident, fire, riots, strikes, damage en route, terrorist activities and even natural disasters. * It is quite prudent to select this insurance coverage as it saves you from heavy expenses that may incur in the future. Along with this, financial assistance is provided in case your two-wheeled vehicle is damaged, lost or in need of repair or replacement. This saves you from incurring high repair costs.* Although comprehensive bike insurance premium rates are higher compared to a third-party bicycle insurance policy, it provides extensive policy coverage for a range of unforeseen situations.*

* Terms and conditions apply

Limits of Multi-Risk Bicycle Insurance:

However, this policy does not cover natural wear and tear on your bike. It cannot protect your bike from its timely depreciation over time. Usually, unless you have taken out a specific option, the fiber and rubber parts of your bike are not fully covered by standard bike insurance. As a general rule, no bicycle insurance will cover consequential loss or damage caused by nuclear attack, war, or driving under the influence of drugs and alcohol.

Despite comprehensive coverage under the comprehensive policy, your bike is still at risk of depreciation Wear and tear on your bike can lead to depreciation over time. Depreciation charges are by default deducted from the amount of your claim at the time of settlement.

However, you can eliminate the depreciation charge by opting for an additional coverage called Zero Depreciation Cover. * The uniqueness of this coverage makes it less of an add-on and more of policy coverage in itself.

* Terms and conditions apply

What is zero amortization two-wheeler insurance coverage?

Over time, as your two-wheeler ages; wear and tear is bound to deteriorate its value. This fact is worrying for many bicycle policyholders as it will give them less value as compensation in the event of an unfortunate event. To prevent depreciation from reducing the amount of your two-wheeler insurance claim, additional coverage known as zero depreciation coverage is purchased. *Under this warranty, your two-wheeler will be considered to have the same value as the day you bought it in the market. Commonly known as bumper-to-bumper insurance coverage, this zero amortization coverage is the best-selling because it guarantees the amount of amortization of your claim. Generally it is available for bikes up to 5 years old. Under this cover, all parts of your bike will be covered at 100%, except tubes, tires and batteries which will be covered at 50%. However, an increase in premium can cover all parts almost 100%. Short; higher claim, higher compensation and improved coverage.* Isn’t this better suited to new drivers or those with luxury vehicles in accident-prone areas?

* Terms and conditions apply

Limits of additional bicycle insurance without depreciation.

This coverage also has a set of limitations. The policy does not cover loss or damage caused by an uninsured risk, hazard or mechanical failure. The normal wear and tear of the insured vehicles is also not taken into account. Loss or damage to uninsured items such as tires, bi-fuel kit and gas kits are a separate liability. The duration of the zero amortization additional cover is approximately 1 year and the policyholder must renew it each year to take advantage of the benefits of the cover.* It costs almost 15% of the bicycle insurance premium, it can therefore be difficult to pay at first, even if over time the compensation will prove to be significantly higher than the insurance premium. *

* Terms and conditions apply

Conclusion:

Now that you understand the difference between the three most common insurance plans, it’s no secret that multi-risk two-wheeler insurance offers good coverage compared to compulsory third-party liability insurance. Nevertheless, if you intend to fully protect your bike and receive maximum claim amount, zero depreciation coverage as a top-up is a must. *It is better to pay a higher premium each year rather than a higher cost on repairs.

* Terms and conditions apply

‘Insurance is the object of the solicitation. For full details of benefits, exclusions, limitations, terms and conditions, please read the sales brochure/policy wording carefully before making a sale.’

This is a joint publication.


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Justin D. O'Neill