Difference Between Own Damage and Third Party Car Insurance

Before purchasing car insurance for your prized possession, it is imperative to understand the types of motor insurance policies offered in India. In this article, we will tell you about own damage and third party car insurance and how they are different from each other.

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What is Third Party Car Insurance?

A third party car insurance policy is a mandatory cover that every car owner must have as per the motor laws of India. This motor insurance policy covers the policyholder against accidental damages sustained by third parties due to the insured vehicle. It covers third party liabilities like third party property damages, death or bodily injuries to the third party caused due to an accident with the insured car.

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 third party property damages.

Thus, to sum up, a third party insurance plan offers coverage against

  • Third-party property damages
  • Death of the third party
  • Bodily injury of the third party,

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 standalone own damage or a comprehensive car insurance policy.

What is a Standalone Own Damage Car Insurance Policy?

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 own 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 third party liability car policy.

If a car owner wants to cover both third-party liabilities and own damages under one policy, then he/she can consider buying a comprehensive motor insurance policy. Besides, insurance companies also offer a bundled car insurance policy that comes with 1-year own damage + 3-year third party liability cover. Under this policy, the policyholder can renew own damages yearly as per his/her requirements.

The coverage of an own damage motor insurance policy can also be enhanced by purchasing additional covers at an extra premium amount. Some of these add-ons are nil depreciation cover, NCB protect cover, roadside assistance cover, tyre protect cover, etc.

Difference Between Own Damage and Third-Party Car Insurance

Let us now understand the difference between own damage and third party insurance with the help of the following table:

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 Own damage cover is not a mandatory cover as per the Indian motor laws. Third party liability cover is mandatory to legally ply on the roads of India.
Exclusions It excludes third party liabilities. Third party insurance does not cover own damages sustained by the insured vehicle.
Standalone Purchase An own damage cover cannot be purchased separately. It can only be purchased along with a third party liability cover or under a comprehensive car insurance cover. Third party car insurance, being a mandatory cover, can be purchased separately by a car owner.
Customization An own damage motor insurance policy can be customized by purchasing additional covers. A third party liability car insurance cannot be customized with add-ons as it only covers third party damages.
Validity The validity of own damage insurance 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 liability-only policy.

Wrapping Up!

Third party and own damages 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 policy for your four-wheeler.

Written By: PolicyBazaar - Updated: 11 May 2022
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