Difference Between Own Damage and Third-Party Car Insurance
Car issues are a concern, aren't they? Perhaps a minor accident with some other vehicle, or you hit something while parking.
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What is Third Party Insurance?
A third party car insurance policy is a mandatory cover that every car owner must have as per the motor laws of India. The Motor Vehicles Act of 1988 has made this policy compulsory for every car owner to drive legally in India. This motor insurance policy covers the policyholder against accidental damages sustained by third parties due to the insured vehicle, offering coverage against:
- TP property damages
- Death of the 3rd party
- Bodily injuries to the third party
Under third party car insurance, the compensation amount is unlimited in case of death. On the other hand, the compensation is limited to Rs. 7.5 lakh for property damages. The premium of a 3rd party car insurance is decided by the IRDAI based on the cubic capacity of a four-wheeler.
However, this policy does not cover damages sustained by the insured car due to any uncertain event. For this, a car owner is required to purchase a standalone own-damage or a comprehensive car insurance policy.
You May Also Read: Importance and Benefits of Comprehensive Car Insurance Policy
What is Own Damage Insurance?
Standalone own-damage car insurance is another major type of motor insurance policy offered by insurance companies in India. Own damage car insurance provides compensation against any damages sustained by the insured car due to an unforeseen event like an accident, earthquake, theft, riot, fire, etc. This policy can only be purchased if you have an existing 3rd party car insurance.
If a car owner wants to cover both third-party liabilities and own damages under one policy, he/she can consider buying a comprehensive motor insurance policy.
Moreover, the IRDAI has also made it mandatory for insurers to offer a bundled car insurance policy that comes with 1-year OD (own damage) + 3-year TP cover to brand-new car owners. Under this policy, the policyholder can renew own damage cover yearly as per his/her requirements.
The coverage of an own damage insurance policy can also be enhanced by purchasing additional covers at an extra premium. Some of these add-ons are zero depreciation cover, NCB protect cover, roadside assistance cover, tyre protect cover, etc.
Own Damage vs Third Party Car Insurance: Key Differences
Here is the table highlighting the differences between own damage and third-party car insurance:
| Point of Difference |
Own Damage Car Insurance |
Third Party Car Insurance |
| Coverage |
Covers a four-wheeler against own damages arising out of road accidents, theft, natural and manmade calamities, etc. |
Offers coverage against any third-party liabilities arising out of the insured car |
| Compulsion |
Not a mandatory cover as per the Indian motor laws. |
Mandatory to legally ply on the roads of India. |
| Exclusions |
It excludes covering TP liabilities. |
Does not cover own damages sustained by the insured vehicle. |
| Standalone Purchase |
Can be purchased as an additional policy with 3rd party insurance to also cover the car's own damages. |
Being a mandatory cover, it can be purchased separately by a car owner. |
| Customization |
Can be customised by purchasing additional covers. |
Cannot be customised with add-ons as it only covers TP damages. |
| Validity |
The validity is usually 1 year, after which it has to be renewed. |
For new cars, purchasing a 3-year bundled third party car insurance is mandatory. Otherwise, you can also go with a one-year 3rd party car - policy. |
When to Choose Third Party Car Insurance?
You should opt for third-party insurance if:
- You are looking for an affordable car policy to meet legal requirements
- You drive in low-traffic zones where there is minimal risk.
- You rarely use your vehicle
When and Who Can Opt for Own Damage Car Insurance?
The following individuals can opt for an own damage car insurance policy:
- New car owners as it provides the essential protection a new vehicle requires
- Owners of high-end or luxury vehicles
- People who drive frequently
- Those who often travel to high-risk zones
How to Choose the Right Car Insurance Policy?
Selecting the right car insurance policy can be overwhelming. But fret not! Follow these tips to make an informed decision:
- Evaluate Policy Coverage: 3rd party car insurance is a must, and helps avoid traffic penalties. A comprehensive plan offers exhaustive protection to you & your vehicle.
- Check Insurer's CSR: The higher the insurer's claim settlement ratio (CSR), the greater the possibility of claims getting settled. Moreover, choose an insurer with an extensive network of cashless garages. It will help you avoid paying repair expenses from your pocket.
- Know the Claim Process: Go through the customer reviews and ratings about the insurer, and pick an insurer that offers 24x7 claim support and a faster claim settlement.
- Choose the Right IDV: Always select the IDV as per your car's current market value. While a lower IDV can save you money on your insurance premium costs, it might lead to higher out-of-pocket expenses when you make a claim.
- Compare Online: Compare multiple car insurance policies online to find the right plan as per your requirements & budget.
Wrapping Up!
Third party and own damage insurance are different from each other in many aspects. While the first one is a compulsory cover, the latter can be purchased to extend the policy coverage as per the requirements of the car owner. You must be well aware of the differences between the two plans so that you can make a wise purchasing decision. Besides, you can also compare plans of multiple car insurers on Policybazaar.com to choose the right car insurance policy for your four-wheeler.
