A Guide to Own Damage Insurance

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Imagine a situation in which an individual meets with a minor accident while driving a vehicle, be it a bike or a car. Since he has already bought a vehicle insurance policy, he wants the insurer to pay for the damage repair expenses. However, he is surprised to know that his policy only provides third-party coverage. Therefore, he has to pay for getting the vehicle repair from his pocket. 

This is an example of a typical case in our country where many people do not know much about motor insurance policies in detail. They only think of it as something mandatory by law, ignoring the fact that it is crucial to choose the right policy with an adequate cover to get maximum insurance benefits.  

If you own a vehicle, you must know the differences between the two types of insurance policies – third-party and own damage insurance. As per law, it is mandatory to buy third party insurance, which protects against the claims filed by a third-party. On the other hand, own damage insurance is optional. 

Here’s a complete guide that defines the importance of own damage insurance:

What is Own Damage Insurance?

As the name suggests, your own damage insurance covers the damage to your own vehicles. It is usually a part of comprehensive vehicle insurance policies, which also include third-party insurance component. It is designed to protect your insured vehicle from damages, minor or major, as well as theft. Buying it is essential as you cannot predict when your vehicle faces damage. 

For instance, someone might throw a stone which accidentally breaks your car’s windshield, or a passerby causes unexpected scratches on your car. The example might sound funny or unreal, but any mishap like this can cause a hefty loss. It is where own damage insurance helps you deal with unforeseen circumstances. 

What is Covered under OD Insurance?

Damages to Your Vehicle in an Accident

The insurance policy covers damages that may occur to your car or bike in case of an unfortunate road accident. 

Damages Resulting from Natural Calamities

If your vehicle gets damaged during the event of an earthquake, floods or similar others, your own damage insurance cover will pay for the repair services.

Theft or Total Loss of Your Vehicle

Own damage insurance will compensate you if your car or bike is stolen or is damaged beyond repair in an accident. You must know that you will get benefits based on the limits defined in the insurance policy. So, it is crucial to read on own damage insurance before you buy a policy.

Is Stand-Alone Own Damage Insurance Available?

Amongst Indian car owners, vehicle insurance is mostly understood between two terms – third party and comprehensive cover. In general, the own damage insurance component is included in most of the comprehensive vehicle insurance policies. On the other hand, a policy without own damage component only offers coverage to what you owe to a third party. So, if your car accidentally collides with that of your neighbor’s, third-party insurance will only pay for his car’s repair services, not yours. 

However, renowned insurance companies like Tata AIG offer standalone own damage insurance policies. As per IRDAI’s mandate of September 2019, you can buy standalone own damage policies for your vehicles. It is particularly useful if you have third-party insurance and are waiting for it to expire to purchase a comprehensive policy with own damage cover. It also means that you can have two different policies for your vehicle at the same time, one covering the third-party aspect while the other for own damage cover.