You park your car outside a shopping mall, finish your errands, and return to find a deep dent on the door. There is no note, no witness, and no way to identify who caused it.
Moreover, since you opted for third-party car insurance, the consequence is: You end up with repair or replacement expenses and additional work.
These situations indicate an important coverage gap. And the way out is Own Damage (OD) Cover. It provides financial protection for your car against losses caused by accidents, theft, fire, natural calamities, vandalism and other covered risks. Overall, it helps you avoid unexpected repair or replacement costs.
If you are exploring the cover and associated details to make your decision, welcome! Here we cover the topic in detail for you. Skip to the relevant section or start from the beginning to know it all.
What is Own Damage Insurance Coverage?
Car insurance is a financial instrument for risk transfer. It offers protection from the financial consequences of accidents and other unforeseen events involving your vehicle. Car insurance is available in three forms:
- Third-Party Car Insurance: This is mandated by the Motor Vehicles Act, 1988. It covers legal liability for injury, death, or property damage to another person.
- Standalone Own Damage (OD) Insurance: This insurance protects only your own vehicle. It covers losses resulting from accidents, theft, fire, natural disasters, riots, and other such covered risks.
- Comprehensive Car Insurance: It combines third-party liability and own-damage cover under a single policy. Thus, it offers broader protection.
Simply put, Own Damage (OD) insurance coverage is the part of a car insurance policy that pays to repair or replace your own vehicle. It becomes active on damage caused by covered events and helps avoid significant out-of-pocket expenses.
OD Cover vs Standalone OD: Clearing the ConfusionBoth terms refer to the same thing: Own Damage cover, which pays to repair or replace your own vehicle after accidents, theft, fire, or natural disasters. The difference is only in how you buy it, not what it covers.
|
Own Damage Cover: Inclusions and Exclusions
Own damage cover offers protection against man-made and natural disasters, accidental damage and more. However, it does not cover third-party liabilities, consequential damage or other losses. So, here are the inclusions and exclusions of own damage cover dealt with in detail:
Inclusions
Own damage cover includes:
|
Exclusions
Own damage cover does not include:
|
Benefits of Own Damage Cover
Own damage cover offers benefits to the vehicle that third-party insurance often lacks. Here are the detailed insights into such advantages:
- Protects from repair cost inflation: OD pays rising repair and spare-part bills
- Covers solo incidents: It covers self-accidents, falling objects and natural events
- Supports total loss: Pays if the car is beyond repair
- Independent tenure: OD comes with a one-year tenure that can be independently chosen from the third-party car insurance
- Cuts out-of-pocket costs: Prevents expenses for minor repairs
- Offers useful add-ons: Allows inclusion of necessary covers like zero depreciation and engine protection
- Offers insurer flexibility: It can be bought from a different insurer than your third-party policy
Difference Between Own Damage Cover, Comprehensive Car Insurance and Third-Party Car Insurance
The three types of car insurance differ on a variety of parameters mentioned below:
| Parameter | Third-Party Insurance | Own Damage (Standalone) | Comprehensive Insurance |
| What it covers | Only your legal liability caused to others for:
|
Only damage to:
|
Both your liability to others and damage to your own car, in one policy |
| Legally mandatory | Yes, required under the Motor Vehicles Act, 1988 | No, optional | |
| Can it be bought alone | Yes, on its own | No, only if you already hold a valid third-party policy | Yes, it is self-contained |
| Covers your own car | No | Yes | Yes |
| Third-party liability | Yes | No | Yes |
| Premium level | Lowest, and fixed by IRDAI | Moderate, based on your car’s value | Highest, since it bundles both covers |
| Effect of car’s age (depreciation) | No effect, premium is not linked to it | Premium falls as the car ages and its IDV drops | Own-damage part falls with age, but liability part does not |
| Add-ons available | None | Yes, such as zero depreciation and engine protection | Yes, the same add-ons apply |
| Freedom to change insurer | Bought as its own policy | Can be from a different insurer than your third-party cover | Both covers are tied to one insurer |
| Best suited for | Meeting the legal minimum at least cost | Those who already hold third-party and want to protect their own car | Those wanting complete protection in a single plan |
Who Should Get Own Damage Insurance Policy?
Own damage cover is an optimal choice for the following individuals:
New Drivers or Car Owners
If you have just learnt to drive, you are more likely to have the odd scrape while gaining confidence. Similarly, if your car is new, its value and repair bills are at their highest. OD would help in such cases by covering repair costs and losses from natural and man-made disasters.
Third-Party Policyholders
This is because standalone OD can only be bought alongside a valid third-party policy. So, it is a natural add-on if you have one. Additionally, it enhances protection for your own car under the liability cover you already carry. And the combination generally comes at a reasonable combined premium.
Expensive or Luxury Car Owners
Repairing or replacing a premium car is often costly. OD cover helps minimise such out-of-pocket expenses.
Frequent Car Users
Driving within or between cities is again associated with a higher risk of mishap and faster wear and tear. The own damage cover restores the car’s condition after an accident.
Financial Planners
Running on a tight budget or facing certain financial constraints leaves little room for sudden and/or large expenses. OD meets such unexpected expenses that would otherwise deplete savings.
Should You Buy Standalone OD or Comprehensive?Lean towards standalone OD if:
Lean towards comprehensive if:
Both give you the same own-damage protection. The choice is about structure and convenience: one collective plan, or two policies you manage separately. |
Add-Ons or Additional Covers Under Own Damage Car Insurance
A standalone OD policy can be coupled with additional covers for better protection. The different options to choose from are:
- Zero depreciation cover to avoid deduction of the depreciation amount from the insurance claim
- Engine protection cover for lesser expenditure on damage to the car’s engine
- Key replacement cover for protection if car keys get lost, stolen or damaged
- Return to invoice cover to retrieve the car’s invoice value on being stolen or if damaged beyond repair
- Consumables cover to meet the expenses of replacing engine oil, lubricants, gearbox oil and nuts and bolts
- Personal accident cover to protect the loved ones against unfortunate accidents that may lead to permanent disability or death
- Roadside assistance cover to have access to service in an emergency
- No Claim Bonus (NCB) protection cover to retain the discount even on making a claim
- Outstation emergency cover to protect if the car breaks down outside a 100 km radius of your distance
How to Get Own Damage Cover?
To purchase own damage cover, the first step is to ensure you have an active third-party cover. If you don’t have one, get this mandatory insurance first. If or once you have it, here are the steps to follow:
Step 1: Research
Decide whether to buy own damage cover from your existing third-party insurer or a different one. You have the flexibility to choose either. Compare insurers on parameters like:
- Premium for the same level of cover
- Insured Declared Value (IDV) offered
- Claim Settlement Ratio, which shows how reliably the insurer pays claims
- Network of cashless garages near you
- Add-ons available, such as zero depreciation and engine protection
- Customer reviews on claim handling and support
Step 2: Choose Your IDV and Add-Ons
Before you enter your details, decide two things that influence both your premium and your protection. These are:
- IDV: Set an IDV that reflects your car’s current market value.
- Add-ons: Pick the add-ons that suit your car and driving style, rather than taking every option on offer.
Step 3: Fill in the Details
Go to the insurer’s website or app and complete the proposal form. You will typically need:
- Your car’s registration number and details from the RC
- Previous or existing policy details, including the expiry date
- Your No Claim Bonus status, with proof if you are switching insurers
- Any past claim details
- Personal and KYC information
Step 4: Review the Quote
The insurer will show your premium along with the terms and conditions. Check that the IDV, add-ons, and any voluntary deductible are what you selected. Also, read the inclusions and exclusions before you agree.
Step 5: Pay and Get Your Policy
Once you are satisfied, pay the premium online through your preferred method. The policy document is issued and emailed to you. Keep a copy accessible, since a digital copy on your phone or DigiLocker is valid.
| Note: If you are buying own damage cover after your previous policy has lapsed, the insurer may require a vehicle inspection before issuing the policy. |
How is Own Damage Cover Premium Calculated?
Own damage cover premium is calculated using the formula:
Own Damage Premium = (IDV x Premium Rate) + Add-on Costs – Discount
Here, IDV is the Insured Declared Value
Discounts include NCB and Voluntary Deductible Discount
Example Showing Own Damage Premium Calculation
Suppose your car has an Insured Declared Value (IDV) of ₹6,00,000 and the insurer applies an own-damage premium rate of 3%. You add zero-depreciation cover costing ₹2,500, and you qualify for a 20% No Claim Bonus.
- Base own-damage premium: ₹6,00,000 × 3% = ₹18,000
- Add zero-depreciation cover: ₹18,000 + ₹2,500 = ₹20,500
- Apply 20% NCB discount (on the base premium, ₹18,000 × 20% = ₹3,600): ₹20,500 − ₹3,600 = ₹16,900
So your own-damage premium comes to about ₹16,900 before GST.
Factors Affecting Own Damage Car Insurance Premium
Own damage cover premium depends on multiple factors. Here is how each one works and how to keep it in check:
Insured Declared Value (IDV)
IDV refers to the car’s current market value and majorly influences the premium. A higher IDV means a higher premium. But it also means a larger payout if the car is stolen or written off (declared as a total loss).
Tip: Set the IDV accurately. Lowering it will lower your premium but will also reduce the claim payout. Hence, aim for a figure that reflects the true value rather than the lowest one.
Car’s Age
Old cars have depreciated value. Hence, they have a lower IDV, which in turn leads to a lower premium.
Tip: No action needed here. An older car works in your favour, as the premium falls with age.
Geographical Zone
Cars in cities with higher accident or theft rates cost more to insure. Zone A cities such as Mumbai, Delhi, Bengaluru and Chennai usually attract higher rates than Zone B cities.
Tip: This follows your registration location, so there is little to change. However, declaring an accurate zone helps pay lower than required.
Engine Capacity
A larger engine (higher cc) is seen as a higher risk by the insurer. Hence, it attracts a higher premium.
Tip: Ensure you choose the right one based on your needs.
Make and Model
High-end and luxury models are costly to repair. Thus, they also carry higher premiums.
Tip: It is best to consider this factor while buying.
Vehicle Modifications
Incorporating accessories such as alloy wheels or a CNG kit increases the premiums.
Tip: Declare modifications accurately. It keeps your cover valid and ensures you are charged correctly rather than facing a claim dispute later.
No Claim Bonus (NCB)
This is the discount on your own damage cover for every claim-free year. It starts at 20% after one claim-free year and rises to 50% after five consecutive claim-free years.
Tip: Avoid claims for minor damages that do not hurt your pocket. It helps build NCB. A 50% NCB significantly reduces the premium. Also, renew it on time to protect it, since a lapse resets it to zero.
Add-Ons
Optional covers such as zero depreciation, engine protection and roadside assistance increase the convenience. But they also contribute to the premium.
Tip: Keep only the add-ons that match your car and driving style. Dropping ones you do not need trims the premium without weakening the cover that matters to you.
Voluntary Deductible
Choosing to pay a fixed share of any claim from your own pocket lowers your premium.
Tip: Opt for a voluntary deductible you can comfortably afford at the time of a claim.
Own Damage Cover Claim
If there is damage to the car and you want to claim own damage cover, here are the associated details:
Types of Own Damage Cover Claims
Own damage cover can be claimed through either of the two methods:
- Cashless Claim: Get your car repaired at the insurer’s network garage. Once the claim is approved, the insurer settles the repair bill directly with the garage. You only need to pay the applicable deductibles and any non-covered expenses.
- Reimbursement Claim: This option allows you to choose your preferred garage. To claim this, have the service done, pay the repair bill and submit the invoices to your insurer. After verification, the insurer reimburses the approved claim amount after deducting the applicable deductibles.
Documents Required to File an Own Damage Claim
You will need the following documents to file an own damage claim:
- Claim form
- Car insurance policy details
- Valid driving license
- Vehicle Registration Certificate (RC)
- FIR (if applicable, such as for theft or major accidents)
- Repair estimate or repair invoices
- Photographs of the damaged vehicle
The insurer may request additional documents depending on the nature of the claim.
How to Claim the Car Insurance for Own Damage
Follow the steps below to claim car insurance:
- Inform your insurer as soon as the incident occurs, either through the app, website, helpline or branch
- Capture photographs or videos of the damage before the vehicle is repaired
- File an FIR if the insurer or the nature of the incident requires one
- Allow the insurer’s surveyor to inspect the vehicle and assess the damage
- Submit the required documents and obtain approval for repairs
- Get the vehicle repaired at a network garage for a cashless claim or any garage for reimbursement
- Once verification is complete, the insurer settles the claim according to the policy terms
How to Gain Maximum Benefit From Own Damage Cover?
Obtaining maximum benefit from own damage cover is possible through the following methods:
- Read the policy documents to understand inclusions, exclusions and other necessary details
- Avoid hiding details that may lead to issues later
- Always keep every bill and repair receipt safely
- Ensure timely and immediate reporting of the accident
- Click clear pictures of the damage before moving the car
- Select the network garage to gain the benefit of cashless repair
- Perform timely car insurance renewal
Wrapping Up
Among the types of car insurance policies, own damage cover fills an important gap left by third-party insurance. While the law mandates opting for cover to protect others on the road, protecting your own vehicle is equally important. This is especially applicable when repair and replacement costs continue to rise.
You can opt to buy own damage cover as a standalone policy or as part of a comprehensive insurance policy. Regardless, it helps with financial recovery from accidents, theft, fire and other covered events. Before purchasing, assess your car’s value, driving needs, and budget to choose suitable add-ons and the right IDV. An informed decision today can prevent significant expenses and inconvenience later.
FAQs
Is own damage cover mandatory?
Own damage cover is not mandatory. Only third-party liability is mandated by law. The choice to opt for own damage cover depends on one’s finances, driving experience, expertise, location, driving style and other factors.
Which is better, own damage or comprehensive cover?
Comprehensive cover is generally a better choice because it combines third-party liability and own damage. However, if you already have a valid third-party policy, a standalone own damage cover is a cost-effective way to protect your own vehicle.
Does own damage cover mean zero depreciation?
Both own damage cover and zero depreciation are different. Own damage cover is the base protection for your vehicle, whereas zero depreciation is an optional add-on. The latter reduces or eliminates depreciation deductions on replaced parts during claim settlement.