Zero-depreciation car insurance: Is it worth it in 2026?

If you are a car owner, you know how expensive the entire ownership experience is. The list includes fuel, maintenance, repairs, insurance, registration, and more. Among these, replacement can be one of the most expensive, and that is where zero-depreciation car insurance comes into play.

Have you heard of it? If not, this article is a must-read. You see, most car owners don’t realise how their policy operates until they file a claim - and often that’s when disappointment hits. When you expected full coverage, the insurer deducted the amount under depreciation.

If you don’t want that to happen, a zero-depreciation add-on is the one for you. Why? With this coverage, you’ll receive a high claim payout that does not deduct depreciation. In short, you are saved from having to shoulder major expenses.

As for the question, is it worth it in 2026? The answer is yes. Zero-depreciation is more relevant than ever, especially with rising repair and vehicle parts costs.

Let's learn more about it …

Common concern with claim payouts

The most common concern about claim settlement payouts is that they are usually lower than expected.

Let us understand with the help of an example -

In a normal scenario, if the car repair bill is PHP 60k after an accident, you would file a claim. But due to depreciation, the settlement amount would be PHP 40k after deduction of depreciation. Meaning, you’d be paying PHP 20k out of your own pocket.

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Zero-depreciation coverage: What makes it different

Several factors make zero-dep insurance different. This includes -

Full claim value without depreciation deduction: This coverage ensures the provider does not deduct depreciation when paying for the replacement of a damaged part. So, if the repair cost is PHP 50k, your policy will fully cover the amount (depending on the deductibles and other terms).

Coverage for several parts: In a standard policy, plastic, fibre, rubber, and metal parts are most affected by depreciation deductions. But that’s not the case with zero-dep insurance, which usually covers headlights, bumpers, fenders, rubber seals, side mirrors, and more.

Top benefits of zero-dep car insurance (in 2026)

Benefit #1. Financial protection for new cars
If your car is less than five years old, zero-deep insurance can be a game-changer. Here’s why? Parts of a new car can be expensive, and replacing them can cost even more.

For instance, a simple bumper replacement can cost tens of thousands of pesos. Zero-dep coverage can help you here.

Benefit #2. Less/no out-of-pocket repair expenses
Do you like costly surprises? Surely not, but the thing about accidents or collisions on the road is that they can happen at any time and to anyone. With zero-dep coverage, you don’t have to spend much while keeping your financial plans secure.

This matters more in 2026, with inflation pushing labour and parts costs higher.g6

Benefit #3. Peace of mind for urban drivers
Your risk quotient increases if you frequently drive to areas like Manila, Cebu City, or Quezon City. Why? You encounter conditions like traffic jams, tight parking, unpredictable road conditions, and flooding. Thus increasing the chances of claims.

Also Read: How regular car maintenance can protect your insurance claims: Let’s find out!

Potential drawbacks of zero-dep insurance

Drawback #1. High premium cost
Let’s be real, getting zero-dep insurance is expensive. Usually, it increases the premium by 15-30% compared to a standard policy with comprehensive coverage.

Drawback #2. Limited eligibility
Most insurance providers in the country offer zero-dep insurance for brand-new or 3- to 5-year-old cars. Old cars usually do not qualify for this coverage.

Drawback #3. Claim restriction & policy conditions
Zero-dep insurance usually comes with certain restrictions, including -

• Number of claims per year
• Flood claim conditions
• Repair shop network
• Coverage for specific parts

Zero-depreciation insurance: Who should consider & who can avoid it

Consider zero-dep insurance if -

You are a new car owner
If you are a new car owner, it is a good idea to get protection against the full cost of repairs. You see, you have made a major investment, so why underinsure and get into trouble later? Accidents can happen to even the most experienced drivers.

You frequently drive in flood-prone & heavy-traffic areas
Flooding is a common occurrence; it is a seasonal phenomenon we can’t ignore. If you are someone who frequently drives or lives in a flood-prone area, it is best to opt for a zero-deep plan, as it would cover expensive repairs (required due to water damage).

Further, commuting in areas with heavy traffic exposes you to risks like accidents and collisions, which again makes opting for zero-dep coverage an obvious choice.

You own a car with expensive parts.
Some car brands require costly repair work and/or pricey replacement parts. This includes European & German cars, as well as high-end SUVs, hybrids, EVs, and imported cars.

The high repair costs, along with depreciation, make matters worse for car owners, so a zero-dep plan is recommended.

Also Read: Mistakes car owners make with add-ons: 7 costly errors that must be avoided

Don’t consider zero-dep if -

You are the owner of an old vehicle with a lower market value
If your car is 7 to 10 years old or older, you can choose to avoid zero-dep coverage, as paying that extra premium doesn’t make financial sense.

You see, in such cases, paying that extra premium outweighs the benefits of add-on coverage, especially if the vehicle’s resale value is low.

Your annual car usage is low
If your car mostly sits in the garage and is used mostly for short trips, the risk of an accident/collision reduces considerably. In such cases, standard comprehensive insurance is enough.

Remember, your insurance policy should match your lifestyle & not to be driven by fear.

Cost comparison: Standard vs. zero-dep insurance

Premium difference

Let us understand it with the help of an example -

Say the standard comprehensive insurance costs you PHP 18k annually; with the zero-dep plan included, the premium will rise to PHP 23K annually. This PHP 5k difference might feel a bit much at first, but if an accident requires major repairs, zero-dep insurance can save you PHP 20k or more.

Long-term vs. short-term cost

It all comes down to your risk tolerance. Say you prefer a lower premium today, standard insurance is for you. On the other hand, if you prefer a lower repair cost tomorrow, zero-dep may be the smarter choice.

Note that neither option is wrong; it all depends on your priorities.

Also Read: Is your car insurance still worth it? 5 signs it’s time to review your policy

How to choose the right car insurance policy?

Compare providers & policy wording thoroughly

You need to do this wholeheartedly, no matter how tedious it may be. This little homework will benefit you in the long run. Compare insurers based on reputation, financial stability, claim process, service centre network, availability of a 24*7 hotline, customer reviews, exclusions, add-on flexibility, and claim approval speed.

Tip: Don’t just compare providers based on premiums; the cheapest policy often compromises coverage.

Also Read: Common roadside emergencies & coverage that will be your saviour

Essential questions to ask when choosing a provider.

Q1. What are the policy inclusions & exclusions?
Q2. Are OEM parts covered?
Q3. Can I choose my preferred repair shop?
Q4. How many towing claims are permitted?
Q5. How many zero-dep claims can I file in a policy term?
Q6. Is flooding damage included?

Also Read: Recipe to choose the right insurance policy for your high-end car

Bottom line

Car owners are often confused about insurance. Their range of questions spans from 'Which is the best insurance?' to 'What are the essential add-ons?' to 'Is CTPL enough?' In addition to all this, the question that lingers in many minds is whether Zero-dep insurance is still worth it?

And the answer, my friend, is YES. For most car owners, getting Zero-dep insurance is beneficial. Especially for those who own a brand-new car, live in high-risk areas, and want strong financial security. In short, this plan will be one of the smartest upgrades to your policy.

Premium? Will that surely hike, but look at the bright side: when the repair hits, you’ll be glad you sent all that extra money before.

It is rightly said that a standard insurance policy saves you money today, but a smart policy (one with zero-dep) saves you more money tomorrow.

Also Read: Common myths around total loss car insurance & the truth behind them