What is a Standalone Own Damage Car Insurance Policy?

Are you tired of feeling like you are paying for car insurance that does not quite fit your needs? Maybe you are looking for coverage that specifically protects your car from damages caused by your actions without involving a third party. Or perhaps you are simply overwhelmed by the sheer number of car insurance policies out there, each with its jargon and fine print. Well, take a deep breath and relax because we are here to help. In this article, we will be diving into the world of standalone own-damage car insurance policies to help you understand what’s in it and what’s not covered.

What is Standalone OD Car Insurance?

Standalone own damage insurance is a type of car insurance policy that provides coverage for damage to your vehicle caused by events such as an accident, theft, fire, or natural disaster. The Insurance Regulatory and Development Authority of India (IRDAI) introduced the concept of standalone own-damage insurance in September 2018 to increase consumer choice and provide more flexible coverage options. However, you can avail of this coverage if your car has active third-party liability insurance.

How Standalone OD Car Insurance Works?

If you’re still a bit confused about own damage insurance meaning, let us dig deeper. For those unfamiliar, "own damage" (OD) refers to the harm done to your own property (in this context, your car). If your insurance has an OD clause, it will pay to fix your automobile if it is damaged. It's also possible to refer to this kind of insurance as "own damage" (OD) coverage, which stands on its own. However, third-party liability insurance refers specifically to a policy that does not provide coverage for the policyholder's damages but only covers damages to third parties. For instance, if you accidentally ram your vehicle into your neighbour's car, your auto insurance will pay to fix your neighbour’s automobile. But you will end up paying for the cost of repairing your own vehicle. 

This is where a standalone OD insurance policy is handy and helps you save money.

Why is Own-Damage Car Insurance Important?

While third-party insurance covers liabilities towards others, it doesn't account for damages to your vehicle. Repairing or replacing a damaged car can be financially burdensome. Own-Damage four-wheeler insurance ensures that you are not left bearing these costs alone. It provides peace of mind, knowing that in case of accidents, natural disasters, theft, or other unforeseen events, your financial interests are protected. Moreover, with the increasing complexity and cost of modern vehicles, having an OD cover becomes even more crucial to safeguard against substantial out-of-pocket expenses.

Who Should Buy a Standalone Own Damage Car Insurance?

Standalone Own Damage Car Insurance is ideal for:

• New Car Owners: Protecting a new vehicle from unforeseen damages ensures its longevity and maintains its value.
• Owners with Existing Third-Party Insurance: If you already have a third-party liability policy, adding a standalone OD cover provides comprehensive protection for your vehicle.
• Owners of High-Value Vehicles: Luxury and high-end car owners benefit significantly from OD insurance due to the higher repair and replacement costs associated with such vehicles.
• Individuals in High-Risk Areas: If you reside in areas prone to natural calamities, theft, or vandalism, an OD policy offers essential protection against these risks.

Essentially, any car owner looking to safeguard his vehicle against potential damages and financial losses should consider investing in a standalone own-damage car insurance policy.

What is Covered in OD Car Insurance Policy?

The own damage coverage includes:

● Accidents:

The standalone OD policy covers the repair and maintenance costs incurred as a result of your car's involvement in a collision or accident within the specified geographical boundaries.

● Theft:

Four-wheelers are a significant investment; a theft could cause serious financial hardship. Nevertheless, you can cover this financial loss with car insurance up to the insured declared value. However, keep in mind that you are only eligible for compensation if the insured vehicle gets stolen in its entirety and not just its components.

● Man made calamities:

Human-caused disasters such as riots, vandalism, or terrorism are unavoidable situations that can potentially harm property such as a house or a four-wheeler, as well as lead to unfortunate deaths. If your car gets damaged in such an event, your standalone car insurance policy will pay for the repairs of your vehicle.

● Natural calamities:

Events such as earthquakes, tsunamis, floods, or other similar unavoidable disasters can cause damage to your four-wheeler. However, with standalone car insurance, you won't have to worry about the extra costs.

Hence, own damage car insurance policy offers peace of mind and provides coverage for unforeseen circumstances.

What's Not Covered in Own Damage Car Insurance Policy?

Some key exclusions under own damage insurance are-

• If you intentionally cause damage to your own car or someone else's property, your insurance does not cover the costs.
• If you are using your car to commit a crime or activities prohibited by the government, your insurer may not cover any resulting damage or injuries.
• If you are driving under the influence of drugs or alcohol, your insurance provider may not cover any resulting damage or injuries.
• If you use your car for racing or other high-risk activities, your insurer may not provide coverage for any resulting injuries or damage.
• If you have made modifications to your car that your insurance company does not approve, your policy may not cover any resultant loss or injuries.
• If you use your car for commercial purposes, such as delivering goods or transporting passengers for hire, your personal car insurance may not cover any consequential injury or loss.
• Your insurance provider may not cover damage to your car due to normal wear and tear, such as mechanical breakdowns or routine maintenance issues.
• Accidents involving your car that result from a minor driver's negligence or a person who does not have valid insurance will not be covered by the insurance.

Compare: Third Party, Own Damage & Comprehensive Car Insurance

Understanding the differences between various four-wheeler insurance policies is crucial for making an informed decision.

What is the Own-Damage Car Insurance Premium?

The own damage car insurance premium is the amount you pay the insurer to avail coverage for damages to your vehicle. This is determined based on various factors, including the vehicle's Insured Declared Value (IDV), make and model, age, geographical location, and selected add-ons. The premium reflects the level of risk associated with insuring your vehicle against potential damages.

How is Own-Damage Car Insurance Premium Calculated

You can determine the premium for your car by applying the following formula:

Insured Declared Value X [Premium by insurer] + [Add-Ons costs] – [No Claim Bonus]

The insured declared value (IDV) is the maximum amount of compensation you can receive if your four-wheeler suffers irreparable damage or gets stolen. You can determine the IDV by deducting the depreciation cost from the original listed price.

Other factors insurers consider while determining the premium costs include:

• Age of the car:

Older cars generally have lower premiums as they have lower market values, while newer cars are more expensive to repair or replace, leading to higher premiums.

• Make and model of the car:
• Certain car models are more expensive to repair or replace, which can lead to higher insurance premiums.
• Driving history:

If you have a history of traffic rule violations, the premium for car insurance will be higher.

• Location:

Insurance premiums can vary based on where you reside, as areas with higher rates of thefts or accidents have higher insurance premiums.

• Usage of the car:

Cars that are used for business purposes or driven more frequently may have higher insurance premiums than cars used for personal purposes and driven less frequently.

• Safety features:

Cars with advanced safety features such as anti-lock brakes, airbags, and anti-theft devices may qualify for discounts on insurance premiums.

As the number of vehicles grows, the cases of road mishaps and thefts of four-wheelers have become common with each passing day. A standalone own-damage policy protects your car from any unfortunate event, relieving you of financial stress.

How to Reduce Own Damage Car Insurance Premium Amount?

While it is essential to have adequate coverage, there are ways to reduce your standalone own-damage car insurance premium:

1. Maintain a Claim-Free Record: Accumulate No Claim Bonus by avoiding claims for minor damages.
2. Choose a Higher Voluntary Deductible: Opting for a higher deductible reduces the premium, but you'll have to pay more out-of-pocket in case of a claim.
3. Install Anti-Theft Devices: Certified security devices can lower the premium due to reduced theft risk.
4. Limit Add-On Covers: Select only necessary add-ons to avoid inflating the premium.
5. Compare Policies: Shop around and compare premiums from different insurers to find the best deal.
6. Renew Policy on Time: Timely renewals prevent policy lapses and potential loss of benefits like NCB.

Factors Affecting Own Damage Car Insurance Premium

The calculation of the own-damage car insurance premium takes into account several key factors:

1. Insured Declared Value (IDV): This represents the current market value of your car. A higher IDV leads to a higher premium.
2. Vehicle's Age: Older vehicles have lower IDVs due to depreciation, resulting in lower premiums.
3. Make and Model: Luxury and high-end cars attract higher premiums due to increased repair and replacement costs.
4. Geographical Location: Areas with higher incidences of theft or accidents may lead to higher premiums.
5. Engine Capacity: Cars with larger engine capacities may have higher premiums.
6. Add-On Covers: Opting for additional covers like zero depreciation, engine protection, or roadside assistance increases the premium.
7. No Claim Bonus (NCB): A discount offered for claim-free years, reducing the premium.

How to File for Standalone Own Damage Insurance Claim?

Here is a step-by-step guide to help you navigate through the claim process:

1. Notify Your Insurer Immediately:

   As soon as an incident occurs—an accident, theft, or any other damage—inform your insurance company. Most insurers have a dedicated helpline or online portal to facilitate this process. Prompt notification is critical to ensure a timely claim settlement.

2. Document the Incident:

   Collect all necessary details related to the incident. This includes taking photographs of the damage, noting down the exact time and location, and gathering witness statements if available. In cases of theft or vandalism, it is important to file a First Information Report (FIR) with the local police and obtain a copy.

3. Fill Out the Claim Form:

   Obtain the claim form from your insurer’s website or branch office. Fill out the form accurately with all the required details, including the incident report, photographs, repair estimates, and supporting documents.

4. Submit the Required Documents:

   Along with the claim form, submit documents such as a copy of your policy, registration certificate, FIR (if applicable), and repair estimates from an authorised service centre. Ensure that all documents are clear and legible to avoid delays in processing.

5. Vehicle Inspection and Survey:

   Once your claim is submitted, the insurer will likely send an assessor or surveyor to inspect the damage. The surveyor will evaluate the extent of the damage and estimate the repair costs. Cooperation during this process is crucial to expedite the claim settlement.

6. Approval and Settlement:

   After the assessment, if the claim is approved, the insurer will process the settlement. The repair work can either be carried out at an authorised workshop, or you might receive a cash settlement, depending on the policy terms and the nature of the damage.

7. Follow-Up:

   Keep in touch with your insurer for updates on the claim status. In case of any additional requirements or clarifications, respond promptly to ensure there are no unnecessary delays in your claim settlement.

Why Choose a Standalone Own Damage Insurance Policy?

Reasons for which own damage insurance policy is considered useful are-

Comprehensive coverage: Standalone own damage insurance provides coverage for a wide range of damages to your own vehicle, including accidents, thefts, fires, vandalism, and natural disasters.

No-fault coverage: Unlike third-party liability insurance, which only covers damages to other people's property and injuries, standalone own damage insurance covers damages to your own vehicle regardless of who is at fault in an accident.

Add-ons: You can enhance your standalone own damage insurance policy by purchasing add-ons. This will provide you with coverage for zero depreciation, engine protection, lock and key protection, roadside assistance coverage, and many more.

Discounts: If you have installed safety devices in your car, have a good driving record, and renew your policy on time, your insurer will give you a discount on your standalone own damage insurance premiums. You can lower the insurance cost by applying the no-claim bonus reward when renewing your car insurance policy.

Do note that there are certain exclusions too. For example, a standalone OD insurance policy will not provide coverage under certain circumstances, such as any damage to the vehicle due to the owner’s carelessness or driving without a valid license.

FAQs

Q1: What does a Standalone Own Damage Insurance Policy cover?
A: This policy covers damages to your vehicle resulting from accidents, theft, fire, natural calamities, and vandalism. It does not cover third-party liabilities, as those are typically covered under a separate third-party insurance policy.

Q2: How is the premium for a standalone own damage policy calculated?
A: The premium is based on various factors such as the Insured Declared Value (IDV) of your vehicle, its age, make and model, geographical location, additional add-ons, and your claim history. Adjustments are made based on these factors to accurately reflect the risk associated with insuring your car.

Q3: Can I add extra covers to my standalone own damage policy?
A: Yes, many insurers offer add-ons like zero depreciation cover, engine protection, and roadside assistance, which you can opt for based on your requirements. These riders enhance your policy but may also increase the overall premium.

Q4: How do I file a claim under this policy?
A: The process involves notifying your insurer immediately after an incident, documenting the damage (with photographs and reports), filing a claim form with the necessary documents, and then cooperating with the surveyor’s assessment. Detailed steps are provided in your policy documentation.

Q5: Is a standalone own damage policy cost-effective compared to a comprehensive policy?
A: For many car owners, especially those who already have third-party coverage, a standalone own damage policy can be more economical. It allows you to pay specifically for the protection of your vehicle without incurring the additional cost of bundled coverage that you might not need.

Q6: How does a No Claim Bonus (NCB) affect my premium?
A: A No Claim Bonus in car insurance is a discount on your premium for each claim-free year. Maintaining a good claim record can significantly reduce your premium over time.

Conclusion

A standalone own damage in car insurance policy is essential for vehicle owners looking for comprehensive protection beyond just third-party liability. It ensures financial security against accidents, theft, natural calamities, and unforeseen damages, reducing the burden of costly repairs. While not mandatory, having an OD cover is a wise investment, especially for new car owners, high-value vehicle owners, or those residing in high-risk areas.

Disclaimer: The information provided in this blog is for educational and informational purposes only. It may contain outdated data and information regarding the topic featured in the article. It is advised to verify the currency and relevance of the data and information before taking any major steps. ICICI Lombard is not liable for any inaccuracies or consequences resulting from the use of this outdated information.