Last updated: 06 Feb 2025If you’re wondering about the difference between own damage and third-party car insurance, you’re at the right place. We’ll break down these insurance types in simpler terms so that you can easily understand them.
Whether you’re renewing your policy or exploring different coverage options for car insurance, you should take expert advice. Hence, without wasting time, let’s dive in and demystify the world of our own damage and third-party car insurance together.
What is Third-party Car Insurance?
Third-party vehicle insurance compensates for the death or injuries caused to other persons and damages to their properties due to an accident involving your insured automobile. This won’t pay for the damages sustained by your vehicle.
Third-party insurance is the minimum insurance mandated by law for all automobiles.
What is Own Damage (OD) Insurance?
Own Damage or OD insurance is optional for a vehicle. It covers automobile theft and damage from accidents or natural or man-made calamities. This will provide protection to your vehicle.
Own Damage (OD) vs Third-Party (TP) Insurance
Let’s understand the difference between own damage and third-party Insurance using the following table:
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Point of Difference
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Own Damage Insurance
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Third-Party Insurance
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Coverage
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Own Damage Insurance
provides coverage for damages to your insured vehicle. It includes accidents, thefts, natural calamities, and man-made disasters.
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Third-Party Insurance covers the liabilities arising from damages to third-party vehicles, property, or bodily injuries caused by your insured vehicle.
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Compulsion
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Own Damage Insurance is not mandatory under Indian motor laws. However, purchasing comprehensive coverage for the protection of your vehicle is highly recommended.
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Third-Party Insurance is mandatory by law to legally drive on Indian roads. It ensures you meet the minimum legal requirement for liability coverage towards third parties.
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Exclusions
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Own Damage Insurance primarily protects your vehicle and does not cover third-party liabilities.
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Third-Party Insurance excludes the cost of damages sustained by your insured vehicle. It solely covers the liabilities of third parties involved in an accident.
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Standalone Purchase
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You cannot purchase Own Damage Insurance as a standalone policy. It can only be availed with a Third-Party Insurance policy or as part of a comprehensive car insurance
plan.
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You can purchase Third-Party Insurance separately, fulfilling the legal requirement for liability coverage towards third parties.
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Customisation
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Own Damage Insurance allows customisation by purchasing additional covers, commonly called add-ons. These add-ons enhance your policy's coverage, such as Nil Depreciation Cover, NCB Protect Cover, and more.
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Third-Party Insurance, being a mandatory cover, does not offer customisation options or add-ons. It provides standardised coverage as per the legal requirements.
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Validity
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Own Damage Insurance typically has a validity of one year, requiring annual renewal. It ensures your vehicle remains protected against unforeseen damages throughout the policy period.
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For new cars, a bundled Third-Party Insurance policy with a validity of three years is mandatory. It provides continuous coverage for legal liability towards third parties.
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When is More Advisable to Go For Third-party Insurance?
Third-party insurance is advisable when-
- You want a cost-sensitive way to meet legal requirements
- If the vehicle is rarely used
- If the vehicle is used in low-traffic areas where the risk of damage is minimal.
When and Who Can Opt for Own Damage Insurance?
Own damage insurance can be chosen by:
- New car owners as it protects the brand new vehicle
- People who are frequently using their vehicle
- Vehicle owners who take their cars to high-risk areas
- Owners of customised or luxury vehicles
Conclusion
Now that you know the details and differences between third-party and own-damage insurance, you can choose the best four-wheeler insurance based on your needs. Being a car owner, it’s best to secure yourself and others with comprehensive car insurance to avoid huge financial liabilities draining your savings.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It may contain outdated data and information regarding the Insurance industry and products. 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.