Difference Between Own Damage and Third-party Car Insurance

Own Damage and Third-Party Liability are common terms that you might have come across while hunting for your car insurance policy. These are the most basic types of policies that your insurer will offer. Once you select the plan, you can move on to the nitty-gritty of the policy like duration or add-ons. But first, knowing what suits you is important. In this article, we will learn how Own Damage and third party insurance are different from each other.

Before the long-term car insurance rule (new cars must have a long-term Third-party policy that is valid for 3 years), people looking for extensive coverage would opt for an annual Comprehensive Car Policy. There was no confusion between Third-party and Own Damage as extensive coverage was available for an equal duration.

Now that long-term Third-party insurance is mandatory for 3 years for new cars, we must find out which type of policy is better for you. So to begin, let's break down these plans and understand the different coverages they provide to help you buy car insurance. 

A Third-party Car Insurance policy financially protects you against third party losses. This means you don’t have to pay compensation to someone you accidentally hit with your car. Why so? Because your car insurance company will bear this amount on your behalf under the terms and conditions of the policy. 

Let’s understand this with an example.

Suppose Ravi accidentally hit Suresh’s car while parking causing damage (broken tail light and a dent on the bumper). Suresh took Ravi’s car insurance details and informed Ravi’s insurance company about the accident. Ravi’s insurer paid for the damage as per policy terms and Suresh could repair his car in the next couple of days. 

Benefits of Third-party Car Insurance

Here is the list of benefits.

What is Own damage insurance meaning? Own damage car insurance covers certain types of financial losses that you (the owner of the insured car) face. Here is an example.

Suppose, Rakhi is an inexperienced driver who has recently received her driving license and wants to practice driving her father’s car.  She drives on a narrow road lined with trees, loses control of the steering wheel and bangs into one. 

There is smoke coming out of the car’s hood and the car has a V-shaped dent at the front. Note, this accident did not affect any third party. It is the insured car that has suffered damage. Rakhi is all well, thanks to the airbags that popped up just in time to save her. The insurer will calculate the claim amount after a thorough survey and pay for the repairs as per policy terms.

Benefits of Own Damage Car Insurance

Here is the list of benefits.

Take a look at the following table to understand more about OD vs TP insurance.

The above table lists differences between own damage and third-party insurance.

Here are a few situations when you can opt for third-party insurance.

Remember that when you decide to buy only a Third-party Liability policy, you are exposing yourself to losses from damage to your car. Consider buying the Own Damage policy if you want all-around car insurance coverage.

When you are looking for comprehensive or extensive coverage, you should buy the Own Damage policy along with a Third-party Liability plan. This will provide holistic coverage against almost all losses related to driving a car. 

Since the Own Damage Car Insurance policy offers coverage against theft and damage from natural calamities, people living in theft-prone, or flood-prone areas can also go for this cover.

Additionally, when you want to get coverage against damages to your car and at the same time comply with the law, you must buy a Comprehensive Insurance policy. Here are the coverages of this plan.

Now that you are familiar with the concept of Own Damage and Third-party Liability plans, you can decide which type is the most suitable for you. Here are a few additional points that will help you plan your car insurance purchase better this time.