What Does Zero Depreciation Car Insurance Mean [Plus Benefits]

Many a car-owner wants to save costs on insuring the vehicle. If you think the same way, chances are that you have asked what does zero depreciation car insurance mean?

As you know, a car is a “depreciating asset,” meaning that its value doesn’t increase. Except you have a classic car, you may be unable to recoup the costs of buying the vehicle.

Therefore, buying a car isn’t always considered an “investment” because you may not get back the capital, let alone make profits.

The chances of getting something tangible out of your car’s value dampens when it gets into an accident. Whether it is an at-fault accident or not, your car’s market value depreciates. In that case, you may have to forgo a huge chunk of money.

But that may not be necessary if you are using zero depreciation car insurance. In this article, you will discover the meaning of zero depreciation in car insurance and whether it is good to buy zero depreciation car insurance.

What is the Meaning of Zero Depreciation in Car Insurance?

Zero depreciation is an insurance policy that doesn’t deduct the devalued or depreciated price of a car. For example, if your vehicle is worth $30,000 and gets into an accident, the value could go down to $20,000. Usually, the car insurance company would only pay that $20,000 being the devalued or current market price of the vehicle.

However, you get to stop that from happening with zero depreciation car insurance. With this car insurance policy, the insurer pays you the value of the car minus its depreciated value.

Why does Zero Depreciation Insurance Make Sense?

What does zero depreciation car insurance mean for car owners and is it even worth it? This type of car insurance has been proven to be ideal for different classes of car owners.

First, a new car owner needs zero depreciation car insurance to get 100% of the vehicle’s coverage.

Second, expensive cars need to be insured with zero depreciation car insurance. That way, the insurance company covers 100% of the costs of replacing the expensive car parts.

Another category of car owners that need zero depreciation insurance is inexperienced or new drivers. For this set of car owners, getting into an accident is common and this can trigger chains of expenses. With zero depreciation car insurance, they get to save some of these costs.

You will also like to make use of zero depreciation car insurance if live in accident-prone areas. It is a smart thing to protect your vehicle with the policy so that the costs of repairing or replacing the damaged parts wouldn’t entirely be on you.

What Does Zero Depreciation Car Insurance Cover?

In addition to knowing what zero depreciation car insurance means, you also need to know the extent of the coverage.

Below are some of the coverage options you can get with the zero depreciation car insurance:

1.    Vehicle Parts

The zero depreciation car insurance provides maximum coverage for the cost of plastic parts and repair of the vehicle’s parts.

Ordinarily, you need to foot the bills for the remaining portion of replacing the car’s parts. However, that is not the case when you purchase zero depreciation car insurance as an add-on. With it, you can get up to 100% recovery of the total costs of the replaced parts in the vehicle.

2.    Claim Amount

Zero depreciation car insurance also provides maximum claims for the policyholder. With the policy, you can make claims to cover the total damage or loss in the vehicle without having to risk any deductions.

What are the Advantages of Zero Depreciation Car Insurance?

Purchasing zero depreciation insurance as an add-on to your standard car insurance is a smart decision. Here are some of the benefits of zero depreciation car insurance for the policyholders:

1.    Flexible Car Insurance Settlement

One of the benefits of zero depreciation car insurance is the peace of mind that comes with it. You don’t have to bother about how to settle the bills because someone (your car insurer) has got you covered.

Besides, you don’t have to forfeit some of the money because it will all be paid in full, even if the car’s value has depreciated.

2.    All-Inclusive Car Insurance

A zero depreciation car insurance policy isn’t limited to inexperienced or amateur drivers. It is all-inclusive because even experienced drivers benefit from it.

In addition, both older and luxury cars are covered up to the full amount of the repaired or replaced parts.

3.    Make Higher Claims

You don’t need to reduce the amount you make as a claim, simply because the car’s parts are expensive.

Rather, you can make higher claim amounts, thanks to the non-calculation of the depreciated value of the car’s parts.

What is Not Covered in Zero Depreciation Car Insurance?

Zero depreciation car insurance covers the vehicle up to the market price, minus the replaced car parts.

However, it doesn’t cover the cost for certain parts, such as coolants and engine oil. Your zero depreciation car insurance does not cover the cost of repairing accidented vehicles caused by drunk driving.

Drivers who don’t have a valid driver’s license wouldn’t be covered by the policy. Likewise, the policy doesn’t cover the cost of repairing the car because of normal wear and tear. If your vehicle suffers a mechanical breakdown, the policy wouldn’t cover it either.

Have in mind that you wouldn’t be able to make a zero depreciation car insurance claim if your vehicle is more than five (5) years from the time of purchase.

Other coverages that are not included in a traditional zero depreciation car insurance policy are:

  • Consumables include lubricants, colts, gear oil, and nuts.
  • Engine breakdown
  • Accidented cars that have been declared “total loss.”

Difference between Comprehensive and Zero Depreciation Car Insurance Policies

You can choose to protect your vehicle with comprehensive car insurance because it offers a lower premium.

However, when making a comparison of car insurance zero depreciation vs comprehensive, the most important element is the coverage. Zero depreciation covers the maximum costs of repairing or replacing the vehicle’s parts while comprehensive insurance covers a few.

Another difference between the two is that zero depreciation doesn’t deduct the depreciation in the vehicle’s parts, unlike the comprehensive, which does.


You now know what zero depreciation car insurance means and its benefits. The only downside to the add-on is that it covers vehicles for up to 5 years, unlike the comprehensive car insurance that covers up to 15 years. That notwithstanding, you get to save more out-of-the-pocket expenses to foot the bills for replacing your vehicle’s parts.


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