When you buy a car, there are many other expenses that follow. One of the necessary expenses is car insurance. There are 3 major car insurance policies available in the market. The first one is third party car insurance which is mandatory as per the law for any vehicle being driven on Indian roads. The other type of car insurance is comprehensive car insurance. This has more extensive coverage and covers the vehicle of the insured under the policy as well. The 3rd kind of car insurance is own damage car insurance. Here is a complete guide to understanding own damage insurance.
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What is own damage car insurance?
When you get third party car insurance, your own vehicle is not covered. In case of a collision, only the other party is covered. You will have to pay from your own pocket for the damages caused to your car. This is why IRDAI made a solution in the form of own damage car insurance. This insurance protects only the vehicle of the insured against natural calamities, manmade disasters, and accidents. It is essential for those who have already bought third party car insurance.
Benefits of own damage car insurance
If you are wondering why, you should buy own damage insurance, here is a list of benefits.
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- Car owners can provide full coverage for their cars by buying third party insurance and own damage insurance from different insurance companies. This allows them to take maximum advantage of different companies. You can save money by going for policies in different companies.
- Comprehensive car insurance costs much more than third party. Car owners can choose to buy own damage insurance along with third party insurance and drop own damage whenever they deem it unnecessary. This saves the car owner from a long commitment to comprehensive car insurance.
- Own damage insurance can be customized using chargeable add-ons. This is not possible with third party car insurance.
- If you find the premium of own damage car insurance too high, you can pay it in installments.
Inclusions and exclusions of own damage car insurance
Whenever you are looking to invest money in anything, it is essential to know the inclusions and the exclusions. Apart from this, it also bodes well to read through the terms and conditions carefully to avoid any unpleasant shocks. Here are the inclusions of own damage car insurance.
- Accidental damages cause to the vehicle in a collision.
- Compensation as per the sum assured in case of theft or loss.
- Coverage in case there is damage due to ignition, fire, lighting, and so on.
- Any losses due to terrorist attacks, riots, or any other man-made disasters.
- Damages caused due to natural calamities like floods, hailstorms, or earthquakes are also covered.
Here are the exclusions of own damage insurance.
- Third party liabilities are not covered in this insurance. This means this alone is not enough to fulfill the legal requirement when you are driving a car.
- In case of an accident, the losses are covered but consequential damages are not covered.
- Any damages that have been caused due to the driver’s negligence like driving through a flood, will not be covered.
- Losses that occur due to illegal activities like driving without a license, driving under the influence of alcohol, or anything along these lines, will not be covered.
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Who should consider buying own damage car insurance?
Own damage insurance should be bought by people who have made a long commitment to third party car insurance. You can change the policy when you are renewing it. Till then, you do not have to be stuck with only a third party car insurance. Own damage car insurance is good support. For example, if you have bought third party car insurance for 3 years and you feel the need for additional cover for your car as well, then own damage insurance can be bought for the remaining 2 years. Post completion of 3 years, you can change your policy to comprehensive car insurance. The sum assured which the insured is expected to receive in case of losses, depends on IDV or Insured Declared Value. This value depends on the depreciation of the car.
Tips you can use to reduce the premium of own damage car insurance
If you are looking to reduce the premium of own damage car insurance, then apart from looking for discounts or great deals from insurance companies, here are a few tips you can use.
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- Deductibles – Voluntary deductibles are the amount you choose to pay from your own pocket in case of an accident. Depending on your budget, you can increase the voluntary deductibles by decreasing your premium amount.
- Insured Declared Value – Ensure you have declared the correct IDV as it affects the claim amount, sum assured, and premium in your own damage insurance.
- Transfer your no claim bonus – Don’t forget to transfer your no claim bonus from your earlier insurance policy to this. This means your sum assured keeps increasing at no extra cost.
Own damage insurance is a good way to ensure your car is protected and it gives you flexibility as well. The cost of this car insurance is lesser than comprehensive car insurance.
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