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Which Is Better Policy - Third Party or Standalone Own-Damage Car Insurance?

Written by Sharad Bajaj
Updated On Oct 15, 20232 min read

Which Is Better Policy - Third Party or Standalone Own-Damage Car Insurance?

It is a well-known fact that carrying a third party insurance policy is a compulsion while driving in India, as per the Indian Motor Tariff. However, the third-party insurance cover serves the basic requirement of law and offers coverage for the expenses which you may incur towards a third party. But, whenever an accident or collision happens, the damages are borne by both the parties involved. Hence, the need for standalone own-damage insurance cover also emerges. However, let’s discuss the details of the third party and standalone own-damage insurance plans and the differences between these plans to find out the better option between them for a car owner.

Third-Party Liability Insurance

A third party car insurance plan tends to cover your financial liabilities towards a third party after an accident or a mishap with your car. This basic insurance plan provides coverage for expenses of third parties caused due to bodily injury, death, or property loss with the involvement of the insured car. In short, third party car insurance is meant to pay off only the cost of damage to third parties on your behalf.

Benefits of a Third-Party Liability Insurance

The following are the benefits of having third party liability insurance:

  • It offers financial stability and legal coverage: In the event of a death, bodily injury or property damage of a third party this cover will pay for the cost of damages. Thus, the cover takes care of the legal and financial burden that comes with mishaps that include another party. It is the most essential and basic car insurance cover out there.
  • Offers insurance holder peace of mind: Driving on the road comes with certain uncertainties, even if you are the most careful driver. With a third party insurance cover, you can be ensured that the insurance company will take care of third party liabilities if such a mishap does happen.
  • Procuring the Claim is a Simple Procedure: If you want to purchase or renew this type of insurance it can be done in moments online. It will require no cumbersome paperwork or extra time from your end. Moreover, the insurance company will instantly send you the insurance document to your registered email ID.

Also Read: 3 Reasons Why A Third Party Car Insurance Is Not Enough?

Standalone Own-Damage Insurance

The standalone own-damage insurance is the reverse of the liability only plan as it is framed to secure your car only and provides no coverage to the third party. This policy compensates the expenses of damage or loss sustained by the insured car due to an accident, theft, fire, natural calamities, man-made disasters, etc. The standalone own-damage insurance opens up the options to avail the add-on covers and discounts for the policyholders.

Benefits of a Standalone Own-Damage Insurance

The following are the benefits of purchasing a standalone own-damage cover:

  • Offers compensation for own-damage costs: The own-damage insurance will pay for the damage to your vehicle in the event of a mishap. It offers more coverage than just the compulsory coverage of third party insurance.
  • You can purchase add-on covers: Own-damage covers offer several add-on covers that are optional. You can pick and choose them to get enhanced coverage for your insurance policy that is suited to individual requirements.
  • No Claim Bonus for claim-free years: With every own-damage cover the insurance company offers NCB to the insurance holder as a reward for their safe driving habits.
  • Coverage for a wide variety of scenarios: An own-damage cover will take care of the car in several scenarios including theft, road accidents, fires, explosions, natural and manmade disasters.

Difference Between Third Party and Own-Damage Insurance

The difference between these car insurance plans magnifies their value and makes it easier for customers to select one. Here are the major differences between third party insurance and own-damage insurance:


Third-Party Insurance

Own-Damage Insurance


The policy covers the expenses of third parties only.

The policy gives coverage only for the damages sustained by the insured car.


The third-party insurance premium is fixed by the Insurance Regulatory and Development Authority of India (IRDAI), hence, it is low and economical.

Premium costs of own-damage insurance covers are determined by insurers, therefore, they vary from insurer to insurer. Also, due to the higher coverage, the plan is available at a higher cost than the liability only plan.


No add-on covers are available under the third party policy.

The add-on covers can be availed with an own-damage policy by paying an additional amount of premium.

Claim Settlement

The third-party claims are settled by the tribunal and insurers have to pay the amount decided by the tribunal only.

The claims of own-damage insurance are settled as per the plan coverage, where the maximum amount of claim which the insurer has to pay depends on the Insured Declared Value of the insured car.

Which Is Better Policy - Third Party Insurance or Standalone Own-Damage Insurance?

Going through the table of difference, you can examine that the third party insurance and own-damage insurance offers different types of coverage to policyholders. The third-party insurance fulfills the legal requirement and is available at a low premium, while the latter comes with an extensive range of coverage and is available at a higher premium. But, what actually makes the difference between these two types of insurance plans is their coverage as the third party insurance plan gives coverage only to a third party for their damages, whereas, the own-damage provides coverage only to the policyholder for their damage and loss.

The third-party car insurance plan is mandatory to hold, hence, it has to be owned by every car owner, but without own-damage insurance, your own car will remain unsecured. However, only those car owners can avoid buying own-damage car insurance who have old cars and do not want to maintain them much. Otherwise, all the policyholders are recommended to buy both these car insurance plans.

Also, Read

Reasons to Buy Standalone Own-Damage Car Insurance Policy

How to Upgrade to a Comprehensive Car Insurance Policy?

Which Is Better Policy - Third Party or Comprehensive Car Insurance?


The complete information and difference between third party insurance and own-damage insurance are essential to understand which one is better for you. We hope that having gone through the above-mentioned details, you must have understood that both plans function differently and every car owner should possess both of these car insurance plans for complete coverage while driving their cars.


This article is issued in the 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.
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Written by Sharad Bajaj
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 Sharad is an insurance industry veteran who has managed motor insurance products for over a decade. He helped set up and scale the motor insurance vertical for a leading insurance company in his previous stint. In his spare time, Sharad likes to read and be in tune with nature.

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