Difference Between Own Damage and Third Party Car Insurance Policy

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6 min read

Updated on Nov 24, 2022

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The foremost and undoubtedly the most crucial decision before buying insurance for your car – which type of policy would best suit your needs? Read on to know the differences between car own damage insurance and third-party car insurance.

You have just purchased the car of your dreams and the first thing you do is head out to the insurance company to buy car insurance. For, as per the Motor Vehicles Act, 1988, you would not be allowed to drive your car on the road without possessing car insurance first. Once you’re there at the insurance company, the next question arises before you – which motor insurance policy to buy? Your insurer would present you with two options – Own Damage Insurance Policy and Third-Party Car Insurance.

Now this is the most crucial and also the most challenging decision that you would make after buying a car. This is because the insurance that you purchase must adequately cover all future damages and costs associated with it. Here we discuss the major differences between the two basic car insurance policies – Own Damage and Third Party – to help you make an informed decision.

What is Third Party Car Insurance?

As the name suggests, a third-party car insurance refers to the insurance policy which is exclusively designed to provide coverage against any loss incurred to a third-party person or property on account of the policyholder’s fault. In other words, if you go and accidentally hit another person or vehicle while driving your car, you need not bear its compensation by way of treatment (person) or repair (vehicle) cost. Your third-party car insurance policy would take care of it for you.

Now that we fairly understand the third party car insurance meaning, let us look at some of the top benefits of this policy for the insured.

Benefits of Third-Party Car Insurance

Buying a third-party car insurance for your four-wheeler can help you in the following ways:

  1. The insurance policy provides adequate cost coverage for any medical treatment that needs to be done for a third-party individual affected by the accident.
  2. Third-party insurance also covers death compensation in case of an unexpected and unfortunate demise of the third party in the accident.
  3. All repair costs involved in the repair of any third-party property (such as vehicle) involved in the accident are paid for by third-party insurance.
  4. All costs involved in any legal proceedings that may have to be carried out in case of hurt or damage caused to a third-party person/property are covered under third-party car insurance.

Note: You can easily buy third party car insurance online by visiting PayBima. The website offers some of the best deals on motor insurance for all your needs.

Own Damage Insurance for Car

Own damage car insurance policy is designed to provide financial coverage for any loss that the owner or insured of the vehicle incurs. This is in contrast to third-party car insurance which covers losses incurred to third-party people or property. A third party may or may not be involved in the mishap; regardless, own damage car insurance would cover losses for the insured.

Why Should You Buy Own Damage Car Insurance: Benefits of Car OD Insurance 

There are a  couple of advantages to buying own damage car insurance for your vehicle. These are:

  • This insurance provides protection to the owner or insured against both natural (earthquake, flood) and man-made (theft, fire) disasters that may impact the vehicle.
  • Financial coverage for accidents is provided to the owner’s car for any damage caused in the mishap.
  • Own damage car insurance also provides the flexibility of including optional add-on riders to enhance the policy coverage.

What is Basic Own Damage Premium in Car Insurance?

Own damage premium primarily refers to the premium amount or the cost that the policyholder bears towards the maintenance of his/her own damage car insurance policy. This price is generally determined by the insurance company based on a couple of factors, such as the age of the vehicle, its make/model, type of vehicle, and the city that it is driven in.

Read More: How to Claim Car Insurance for Own Damage?

Car Own Damage vs Third Party Insurance: Difference Between Own Damage and Third Party Insurance

We saw above the meaning of own damage car insurance policy and also what third party insurance for a car stands for. Also, we looked at the prime benefits of buying each of the two policies for a car owner. While both have their own unique benefits, the decision as to which car insurance to buy can sometimes be quite overwhelming for the owner.

To help you make an informed choice, we present here the key differences between own damage and third-party car insurance policies in the following table:

Key Parameters Third-Party Car Insurance Policy Own Damage Car Insurance Policy
Adequate Coverage This is a basic car insurance plan that every car owner needs to buy mandatorily; however, it is generally not sufficient to cover all damage costs, particularly the ones relating to your own car It covers all costs related to damage of one’s own vehicle in case of mishap. Since third-party insurance is mandatory, own damage cover can be added on to enhance policy coverage
Primary Coverage Provides coverage only for third-party damages (third-party people hurt or property damaged in an accident) Primarily covers all damages caused to the car of the owner or insured in the policy
Plan Validity Three-year car insurance mandatory to buy after purchasing a new car; annual car insurance policy also available Policy can be purchased for a term of 1-3 years; short-term plans generally preferred more due to cost factor
Mandatory to Buy Buying third-party car insurance after car purchase is mandatory as per the Motor Vehicles Act, 1988 Own Damage Car Insurance Policy is not compulsory to buy but is generally recommended to be added on to the base third-party insurance for coverage enhancement
Policy Exclusions Any own damage to the car of the insured during a mishap is not covered under this policy No third-party damage costs are borne by the insurer
Pricing The cost of the plan is determined by the insurance regulatory body, IRDAI, and the insurer has no say in the price nor the right to change it Can be purchased online at the best deal available after comparing different insurance policies offered by various insurance companies
Policy Customization Permissible No customizations allowed Can be customized by including add-on benefits to suit individual needs

Summary

Buying third-party car insurance is mandated by law. However, whether or not you wish to buy an own damage insurance cover is purely a personal choice. Hope the information contained in this blog helps you make an informed decision regarding the same.

Found this post informational? Browse PayBima Blogs to read interesting posts related to Health Insurance, Car Insurance, Bike Insurance, Term Life Insurance and Investment section. You can visit PayBima to Buy Insurance Online.

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PayBima Team
PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.

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