If you are someone who is keen on buying a car, and have done all necessary research on which car to purchase, then you must also be aware that you cannot drive a car in India without a motor insurance policy.
When learning about motor insurance, you will cross paths with terms like third-party insurance and own damage insurance. This article will prove helpful in knowing more about these terms.
To overcome the challenge of making the right insurance purchase decision, you must know the difference between own damage and third-party insurance policies. This difference is what we will discuss in this article.
What Does Own Damage Insurance Mean?
An Own Damage or OD insurance is a motor insurance type that safeguards you from undergoing financial losses because your car suffered damages due to natural calamities or other unforeseen events like an accident.
It was introduced as a standalone own-damage insurance concept by the IRDAI in 2018, so that consumers can enjoy flexibility in coverage options. But it is crucial to remember that you can only opt for this insurance policy if you already own third-party insurance cover.
What it Includes
In the own damage vs third-party insurance comparison, it is important to know what own damage insurance generally covers. Therefore, here is a list of inclusions of an own damage policy:
Natural disasters like cyclones, floods, earthquakes, fires, etc.
Malicious acts, thefts, etc.
Damage due to explosion, self-ignition, etc.
Man-made disasters like terror attacks, vandalism, inundation, riots, etc.
Damage to the car or the belongings in it due to an accident.
Damage during transit by elevator, rail, air and road.
What it Excludes
Damages inflicted upon a third-party vehicle.
Damages inflicted upon the property of a third party.
Deterioration or damage due to everyday use.
Physical injuries inflicted upon others in case your car is involved in an accident.
Electrical and mechanical breakdown.
Benefits of Opting for Own Damage Insurance
Trusted insurers provide the option of cashless repairs across their network garages.
You can avail of discounts through the No Claim Bonus.
A variety of add-ons to provide additional coverage benefits are available.
Voluntary deductibles are available for lowering the premium costs.
The online process for purchasing the insurance policy and for claim settlement.
What Does Third-Party Insurance Mean?
A third-party car insurance policy is a car insurance plan that aims at covering you (as car owner) financially if your vehicle is responsible for an accident in which a third person is injured or their property is damaged, and they make claims for you to compensate them.
It is legally required for all vehicle owners to have a third-party insurance policy. If a car owner is found to be without this insurance policy, they will be penalised according to Indian Laws.
What it Includes
To understand third-party insurance vs own damage, you have to know what third-party insurance covers. The financial coverage provided to the insured under this policy includes:
Physical injury or death of a third party.
Damage caused by the insured car, to a third-party vehicle.
Third-party property damage.
What it Excludes
Financial coverage is not provided for:
Damage to the insured vehicle or its belongings in case it meets with an accident.
Damage to the insured vehicle over time.
Financial loss incurred by the vehicle or its belongings being destroyed or stolen.
Benefits of Opting for Third-Party Insurance
It makes you legally compliant and keeps you from being penalised for not owning a motor insurance policy.
It saves you from financial liabilities that may arise because your insured car met with an accident that resulted in damage to a third party.
It provides you with financial protection in case you (as the insured car owner) requires medical treatment because of an accident that involved your car.
Difference between Own Damage and Third-Party Insurance
Parametres |
Third-Party Insurance |
Own Damage Insurance |
Scope of coverage | Offers financial coverage against third-party liabilities, including physical injury, death and property damage that involves your insured car. | Offers financial coverage to your insured vehicle in case of accidents, natural calamities, man-made disasters, theft, damage during transit, etc. |
Is it mandatory? | Yes, the MV Act of 1988, has made it mandatory to own this insurance policy. | No, this is not mandatory to own. However, opting for this insurance cover will protect your car. |
Is customisation available? | No, you cannot customise this insurance policy. However, it includes Personal Accident Cover for your protection. | Yes, this insurance cover can be customised for added protection. There are several add-ons to choose from, while purchasing this insurance policy. |
Is it enough? | Yes, if you are tight on your budget and want to abide by the Law of the country. However, if you want extensive cover, you can add cover for your own damage protection to this policy. | No, because the Law makes it mandatory to own third-party insurance. You have to purchase OD and a third-party cover for extensive coverage. |
What is the main exclusion of this insurance policy? | It excludes coverage for damage to your own car. | It excludes coverage for damage to a third-party. |
What is the validity period? | It has been compulsory (since 2018) to purchase third-party coverage for at least 3 years. | You can opt for a 1-year or 3-year OD policy. |
Own Damage Insurance vs Third-Party Insurance - Why You May Need These Types of Coverage
Now that we have understood own damage vs third-party insurance in detail, let us understand the reasons for opting each of these policies.
Here is why you should consider buying third-party car insurance:
You are legally required to own this insurance policy.
It safeguards you from legal and financial liabilities arising from third-party bodily injury or property damage.
It protects you from having to pay penalties for not owning a motor insurance policy.
It is well-suited for you if your car is old or if you have a limited budget assigned for investing in an insurance policy for your car.
Here are the reasons to opt for an OD insurance policy:
This cover helps you stay financially protected if your car is subject to accidents, fire, natural calamities and man-made calamities.
It is a preferable choice of policy for those looking to widen their financial coverage beyond third-party insurance coverage.
It gives you the option of including add-ons that can help you financially as and when your car needs repairs or replacements.
Conclusion
Both third-party and own damage
car insurance policies cater to various needs and serve well-defined purposes. Reliance General Insurance makes it convenient for you to opt for a car insurance policy in a simplified and quick manner. Our 24*7 helpline and our Reliance Self-i App are readily available to assist you with the buying or renewal process.
Whether you want to invest in
third-party car insurance only or want to own both these policies depends on your requirements and budget. With us, you can enjoy several benefits, such as cashless claims, a hassle-free buying process and unlimited liability for personal damage.
Additionally, you can go through our website to learn more about
own damage car insurance and the different add-ons and discounts that it comes with. Our own damage policy is available with exclusive features like zero paperwork, extensive list of add-ons and no claim bonuses.
Frequently Asked Questions
Is it possible to buy both Own Damage and Third-party policy separately?
Yes, both these policies can be purchased separately from a trusted insurer.
Can these policies be purchased as a combined policy?
Yes, you can opt for a comprehensive insurance policy, which bundles these two policies together.
