IRDAI Allows Standalone Own Damage Motor Insurance Policy
The Insurance Regulatory and Development Authority of India (IRDAI) has allowed both old and new vehicle owners (car as well as bike) to get a standalone own damage (OD) insurance cover at the time of both policy purchase and policy renewal from September 1, 2019. Earlier, both old and new vehicle owners were required to purchase an own-damage motor insurance policy bundled with a third-party motor insurance policy. However, it is important to note that a third-party (TP) motor insurance policy still remains a mandatory requirement for all vehicle owners as per the Motor Vehicles Tariff, 2002.
With the introduction of the option for standalone own damage insurance policy, vehicle owners will now be able to enjoy greater flexibility while buying/renewing motor insurance policy in two ways - firstly they will be able to purchase an OD cover at a later date that a TP policy and secondly they will have a choice to purchase it from a different insurance company. Earlier a vehicle had no choice but to buy a TP cover as well as an OD cover from the same insurer.
Difference Between Third Party Cover And Own Damage Cover
Third Party Cover
Own Damage Cover
Only third party liabilities - life and property (up to Rs. 7.5 lakh)
Only own damages suffered by insured's vehicle in an accident, theft or any other mishap
Availability of Add-ons
No availability of add-ons
Availability of all add-ons such as zero depreciation cover, engine cover, etc.
Why Is It Important To Have An Own Damage Insurance Cover?
Although not mandatory but it is advisable to purchase an own-damage motor insurance policy for your vehicle. An OD cover allows you to get indemnified by your insurer for all the damage or loss sustained by your insured's vehicle in an accident, fire, vandalism, theft, natural/man-made calamity or any other unfortunate event. By purchasing an OD cover, you save yourself from bearing the financial liability of getting your vehicle repaired.
Effect of Introduction of Standalone OD Cover on Motor Insurance Industry
The introduction of standalone own damage motor insurance policy will increase the level of competition among motor insurers. Earlier, in most of the cases, vehicle owners used to end up buying a motor insurance policy from an insurer who had a tie up with their car dealers just to meet the legal requirement of owning a TP cover. However, now with the introduction of a standalone OD cover, vehicle owners will have time to do research and purchase an OD cover which best suits their requirements at a date later than the purchase of a TP policy. This will push the insurers to design more customer-oriented OD covers. The increased competition among insurers can also result in insurers lowering the OD premium to attract more customers.
The introduction of the standalone OD cover is expected to bring a positive change for vehicle owners by bringing greater flexibility to vehicle owners about the purchase of their motor insurance policy along with making motor insurance premiums more attractive.
Disclaimer: This article is issued in general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.
Reference - https://economictimes.