Own Damage Insurance
A Detailed Guide about Own Damage Insurance a.k.a. OD Insurance
As the name suggests, an Own Damage Insurance is a customized motor insurance policy designed to protect you and your insured vehicle from your own damages, i.e. damages and losses caused to your own vehicle.
Let’s take a seemingly funny but often true example; let’s say your car is parked at its usual place and all of a sudden, the tree beside lets down one of its branches or worse, your neighbor's cricket ball attacks one of its windows and the ultimate, a coconut falls and leaves not only shackles but dents too!
Funny as a story but, hefty losses in retrospection, in real life! In such situations, an OD insurance is one that could help you get out of such unfortunate troubles.
Know more about:
Who is eligible to buy an Own Damage Insurance?
Applicable since September 2019, insurance companies can now offer standalone Own Damage Insurance policies for cars and two-wheelers that only have a third-party car or bike insurance in place.
For example; Many car or bike owners have bought long term third-party policies at the time of purchasing their vehicle (especially those who got these in March 2019) can now opt for a standalone OD insurance too to cover for own damages and losses as well.
Note: When you buy an od insurance, you indirectly confirm that you already have a valid third-party policy (as made legal by the Indian Motor Laws) in place. This could be one from Digit Insurance, or a different insurer too.
Who should get a Standalone OD Insurance?
If you’ve recently already bought only a Third-Party Insurance from Digit, you can now also get a standalone Own Damage cover to protect your own vehicle from damages and losses too.
If you’ve recently already bought a vehicle, and consequently got a Third-Party insurance from another insurer, you can then choose to buy your standalone Own Damages cover from Digit too. This will include coverage for your vehicle from accidents, natural calamities, thefts, et al while you can also opt for add-on covers to extent the scope of your coverage.
What is covered in OD Insurance?
What’s not covered?
While an Own Damage cover is great for your vehicle’s protection, here are few exceptions.
This is a standalone Own Damage Insurance policy. Therefore, your third-party liabilities won’t be included in this. Your third-party vehicle insurance will instead take care of the same.
This goes against the law, therefore claims won’t be covered if you were driving under the influence of alcohol.
As a standard rule, no insurance can accept claims if the said person is driving illegally. Therefore, claims can only be made if you were rightly driving with a valid driver’s licence.
This is pretty obvious, isn’t it? If you haven't bought specific add-ons, you won’t be able to benefit from them. For example, without opting for a tyre protect cover- your tyre will only be protected during accidents and not beyond that.
Consequential damages refer to damages that take place after an accident. Unfortunately, those won’t be covered unless the damage has happened during the accident itself.
In simple terms, this means your vehicle won’t be covered if you’ve done something you weren’t supposed to do. For example; if your city was already flooded and you still took your car or bike out in the floods.
As per the law, if you only have a learner’s licence, you need to have someone with a permanent driver’s licence with you. If that’s not the case, your vehicle won’t be covered.
Add-ons available with Own Damage Insurance
- Zero Depreciation Cover
- Engine and Gearbox Protection Cover
- Breakdown Assistance
- Consumable Cover
- Return to Invoice Cover
- Tyre Protect Cover (only for car)
- Passenger Cover (only for car)
What is Own Damage Premium?
An Own Damage Premium is the price you pay for your OD insurance. The premium price for the same is usually determined based on the type of vehicle you own; how old it is and the city you use it in.
However, no matter what your premium price is, every OD insurance policy offers you protection from the following:
- Accidental damages caused by external means.
- Burglary, Theft and Housebreaking.
- Fire, Explosions, Implosions, Lightning, and self-ignition.
- Natural calamities like flood, typhoon, cyclone, hailstorm, etc.
- Earthquake, landslide and rockslides.
- Transit of vehicles by rail, road, air, or inland waterways.
- Terrorism Attacks, Riots and Strikes, or Malicious Damage.
How is the Own Damage Premium is calculated?
The Own Damage Premium either for a four-wheeler or a two-wheeler is based on:
- Make, Type and Age of the vehicle.
- The Declared Value of the Vehicle.
- Cubic Capacity of the Engine.
- Geographical Zone
Let us look at the mathematical computation of the Own Damage Premium, but before you should know the basis of the calculation.
OD premium - IDV X [Premium Rate (decided by insurer)] + [Add-Ons (eg. bonus coverage)] – [Discount & benefits (no claim bonus, theft discount, etc.)]
IDV - Showroom Price of the Vehicle + Cost of Accessories (if any) - Depreciation as per (IRDAI)
How to reduce OD insurance premium?
- Increase Voluntary Deductibles - In an OD insurance, there’s something known as ‘Voluntary Deductibles’, which refers to the amount of money you choose to pay during claims. Therefore, based on your feasibility you can increase the percentage of your voluntary deductible, which will directly reduce your OD premium.
- Declare Correct IDV - With Digit, you are given the option to customize your IDV yourself. Therefore, make sure your IDV is always right since this will affect both your OD premium and your claim amounts too during claim settlements.
- Don’t Forget to Transfer your NCB - If you’ve had an Own Damage or Comprehensive Motor Insurance policy before, ensure you transfer your NCB to your current policy, to get your accumulated discount.
Difference between the Third-Party Premium and Own Damage Premium
We know that as per the Motor Vehicle Act, 1988 in India we can have two kinds of policies. One can be a comprehensive policy with Own Damage and Liability Cover, and the other can be a standalone Third-Party Liability Policy. Over the years, the liability claims have risen resulting in the increase of the Third-Party premium.
| Third-Party Premium | Own Damage Premium | |
| Basis of Calculation | It is fixed by the Insurance Regulator depending on the Cubic Capacity of the vehicle. | Own Damage Premium on the other hand is computed based on the IDV, year of purchase, location and type of the vehicle. |
| Stability | The Third-Party premium can be increased and decreased by the regulator IRDAI. | The Own Damage premium will decrease as the value of the vehicle will depreciate over the years. |
| Share in Motor Premium | Always would be a share as fixed in the Motor Policy, be it comprehensive or standalone. | It may or may not form share in the Motor Policy premium. |
What should I get?
An Own Damage Insurance, Third-Party Insurance or Comprehensive Insurance?
This all depends on the kind of coverage and protection you want, both for your vehicle and your pocket! Your best bet would be to go for a Comprehensive Insurance as it covers for both the mandatory, third-party losses and damages and your own damages as well.
However, if you already have a valid Third-Party Insurance, you can simply go for an OD insurance to get complete coverage for your respective vehicle.
The total amount of coverage offered, at the time of claim, will depend on the conditions specified in the policy and obviously your insurance plan. Every year the extent of coverage and own damage premium changes because the value of the vehicle depreciates.
FAQs about Own Damage Insurance in India
What does OD mean in insurance?
OD in insurance refers to ‘Own Damage’, which implies that it covers for damages and losses of your own vehicle.
Who is eligible to buy an od insurance?
Anyone who already has a valid third-party motor insurance can buy a standalone od insurance to cover for own damages and losses too.
What are the different types of motor insurance policies available?
There are namely three types of motor insurance plans you can buy; Third-Party Motor Insurance Policy, Comprehensive or Standard Motor Insurance Policy and an Own Damages Motor Insurance Policy.
Is OD insurance mandatory by law?
No, an OD insurance for your car or bike isn’t mandatory but is recommended for protection for your own vehicle. As per the Motor Vehicle Act, the basic Third-Party Insurance is mandatory for all vehicles. Additionally, you can also opt for a Comprehensive Insurance to cover for both Third-Party Liabilities and Own Damages, both within one policy.
When did an OD insurance come into effect?
A standalone OD insurance was introduced by the IRDAI in September 2019 to specifically help those car and bike owners who bought long term Third-Party policies in March 2019 (as per law) so that they have the option to cover for own damages too. Additionally, this cover is applicable to anyone who only has an active Third-Party motor insurance policy.
Can I still buy an OD policy if my Third-Party policy is expiring in June?
Yes, you can opt for an OD policy as long as your Third-Party policy isn’t expiring in the next four months.