Key takeaways
- Zero depreciation cover also called new for old cover ensures your insurer pays for replacement parts at full value without subtracting depreciation.
- Normally, when you claim for bike damage, insurers deduct depreciation for wear and tear on parts. With zero depreciation, you get brand new parts in repairs.
- It is an optional add on to your policy and raises the premium. It’s most valuable for new bikes with expensive parts or if you ride frequently.
- Not all U.S. insurers offer it, but some high end or specialty policies include it. Evaluate its cost versus the benefit for your bike.
How depreciation affects claims
Consider this scenario: You purchase a brand new helmet for $300, but a year later it’s worth only $150 due to age and use. If that helmet is stolen and your policy includes accessory coverage but no zero depreciation cover, you might only get $150 back based on actual cash value. With zero depreciation, you would get the full $300 replacement.
To understand how insurers calculate this, see how actual cash value work. Your payout is based on the current value, not the real cost to replace it.
The same idea applies to motorcycle parts. Without zero depreciation, the insurer might only pay part of the replacement cost depending on age and usage.
Benefits of zero depreciation cover
- Full reimbursement: You pay no depreciation on parts and the insurer covers the full replacement cost.
- Peace of mind: Especially on a newer bike, this means your out of pocket cost after a claim is usually just the deductible.
- Better for high end bikes: Custom or expensive bikes with fiberglass, rubber parts or aluminium parts can lose value quickly, making this cover more useful.
It stops you from taking a financial hit after already paying for insurance.
Examples
- You crash and damage a brand new headlight that costs $200 new but is valued at $100 after depreciation. With normal coverage, the insurer pays $100 minus your deductible. With zero depreciation, the insurer pays the full $200, saving you the difference.
- A stolen seat that originally cost $500 might only be valued at $300 after a year. Zero depreciation means you get the full $500 instead of a reduced amount.
Cost and considerations
- Premium impact: Adding zero depreciation can increase your premium by a noticeable percentage, sometimes around 20 to 30 percent more.
- Not always available: Many basic policies in the US do not offer it. It is more common in comprehensive plans or offered as an option by some insurers.
- Duration limits: This add on is often only available for bikes up to a certain age, usually around 2 or 3 years from purchase. After that, depreciation applies again.
- Check details: Always read the policy carefully. Some policies cover all parts while others may exclude items like tires or electronics.
Zero depreciation cover is really about how much protection you personally want. If you ride a newer or expensive bike, it can make a big difference when something goes wrong. If your bike is older or you are comfortable covering some costs yourself, you might decide it is not worth the extra premium.
It really depends on your riding habits and how much you want to protect your bike.