What is "zero depreciation" in car insurance?

Answered by Home Insurance, Car Insurance Expert Shannon on December 27, 2020

What's is this type of coverage called zero depreciation insurance? Is that something I can/should get?

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Home Insurance, Car Insurance Expert

Zero depreciation is an insurance concept where vehicles (usually new or within three to five years of age) are covered in a loss without factoring in the depreciation, or loss in value, of the vehicles or parts to repair the vehicles. This is a supplemental form of coverage and is not typically offered in the United States. In the U.S., insurance indemnifies the insured, meaning it’s meant to return them to the same state as prior to the loss, no more and no less.

But even without zero depreciation coverage, you still have some great options! There are other types of coverage to consider. Some carriers offer new car replacement insurance, where if your new vehicle is a total loss, the insurance company would pay to replace the vehicle within a specified timeframe without depreciating the value of the vehicle. Gap insurance, on the other hand, pays for the difference between the loan amount (if any) and the depreciated value of the vehicle.

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