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Difference between Own Damage and Third-party Car Insurance

Team AckoNov 11, 2021

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 Liability insurance are different from each other?

Difference Between Own Damage and Third-party Car Insurance

Between Own Damage and Third-party Car Insurance, which is a better policy? 

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. 

What is Third-party Car Insurance and what are its benefits?

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.

  • Third-party property damage

  • Coverage for third party medical treatments

  • Compensation for death

  • Coverage for legal liabilities you face when you accidentally hit someone or damage their property.

Own damage insurance: Meaning and benefits

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.

  • Coverage for damage to the car from accidents

  • Theft cover

  • Coverage for natural or man-made calamities

  • Fire damage

  • Option to customise the plan with add-ons

Difference between Own Damage (OD) and Third-party (TP) insurance  

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

Factors Own Damage Car Insurance Third-party Car Insurance
Primary cover Own Damage Car Insurance provides coverage to the insured car.  Third-party Car Insurance provides coverage against third-party liabilities.
Major exclusions Does not cover third-party liabilities. Does not cover Own Damage.
Is it compulsory? No, it is not compulsory to buy an Own Damage cover. Yes, it is compulsory to buy a Third-party Car Insurance policy in order to follow the law.
Is it sufficient? Since you have to compulsorily buy a Third-party plan, getting the Own damage cover will add to your insurance coverage. Buying only the Third-party policy may prove to be insufficient as you still need to bear the expense costs related to your car in case of damage.
Validity Can vary between one, or three years. However, people usually prefer buying a short-term plan as long-term plans can be expensive. If you own a new car, then you have to mandatorily buy  CVDXSQa 3-year Third-party Car Insurance plan. Else, you can go for an annual policy.
Can we customise this policy? Yes, you can customise the Own Damage policy with car insurance add-ons to suit your needs. No, you cannot customise this plan.
Can you get a better price? Yes, you can go online and compare car insurance plans from different insurers to get the best coverage at a lower price. No, the insurance regulator determines the cost of this policy and insurance companies cannot make changes in the price.

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

When is it more advisable to go for Third-party insurance?

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

  • Go for Third-party Car Insurance when you want to drive a car legally in India.

  • Buying at least this plan will ensure that you are not penalised by traffic police for not having a valid car insurance policy.

  • If you drive occasionally and in a safe manner then you can consider buying only this basic plan.

  • Buying the mandatory plan will also help you pay fair compensation to people whom you have accidentally hurt. They can get timely treatment or repair the damage that you may have caused to their property. 

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 and who can opt for Own Damage insurance? 

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 Car Insurance policy. Here are the coverages of this plan.

  • Third-party Liability coverage

  • Own Damage Cover

  • Option to customise the plan with add-ons

  • A Personal Accident Cover (it is mandatory to buy this as a separate coverage)

Also, Read: Comprehensive vs Third-Party Car Insurance

How to plan your car insurance purchase better?

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.

  • Compare Comprehensive car plans online to get the best coverage, services, and price.

  • Know the reputation of the insurance company by reading customer reviews and testimonials. Also, check the claim settlement ratio of the company to understand how likely your car claim can come to a positive conclusion. All this will give you an idea of the insurer’s reputation for customer satisfaction.

  • Looking for value-added services with the insurance policy will help make the entire experience smoother. At ACKO we offer instant claims for minor damages, a 3-day repair service, and free pick-up and door-step delivery after car repairs in select cities.

  • Always plan your car insurance purchase at least a few days before the expiry of the policy so that you can spend time looking for a better plan.

  • You can even opt for Third-party car insurance online.

  • And last but not the least, always go for extensive coverage if you want to reduce the financial losses related to car damage.

Frequently asked questions

Now take a look at a few questions about the difference between Own Damage and Third-party insurance. You can always get in touch with us by sending an email at [email protected] if you have more queries.

What is the claim process for Own Damage Car Insurance policy?

If you are an ACKO customer then the claim process is like a cakewalk. Simply download ACKO’s mobile app or visit the car insurance page, and follow these steps.

  • Step 1 - Log in to your ACKO account.

  • Step 2 - Click on “Claims” to inform ACKO about the damages.

  • Step 3 - Answer a few questions and upload the required documents to raise a claim.

At ACKO, we try to settle minor claims within a few hours. Major ones may take a little longer depending on the damage.

Is it considered legal if I drive with only an Own Damage policy?

Driving a car with only Own Damage cover will expose you to Third-party liabilities and fines. Buying at least a Third-party policy is mandatory. So, driving a car with only the Own Damage cover is illegal.

Why are add-ons important?

Add-ons are additional covers that enhance your Own Damage policy and reduce financial losses. Thus, they play an important role in car insurance.

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