What is Own Damage Premium in Car Insurance?

Features and Benefits of Own Damage Insurance

OD Car Insurance comes with a host of benefits. Some of the key benefits include coverage against collisional damage, natural and manmade calamities, and theft. Essentially, Own-Damage Car Insurance does what it says: it covers your own vehicle from damages. That is why it is an important consideration for all car owners. There are more coverages under OD Car Insurance, which we will discuss in the next section. 

 

What is Covered Under Own Damage Insurance?

The following are the key coverages under Own Damage Insurance.

1. Accident-Caused Damages: Collisional and other road accidents are covered by an OD policy.

2. Theft/Lost: If your vehicle is stolen or lost, you will be compensated with its current market value.

3. Fire: If your car gets damaged in a fire, you will receive coverage as per the policy terms.

4.Natural Calamities: Damages caused by floods, cyclones and other natural disasters are covered.

5. Manmade Calamities: Damages caused by riots, strikes and other man-caused disasters are covered.
 

Limitations of Own Damage Insurance

The following are some of the exclusions of an Own Damage Car Insurance Policy.

1. Third-Party Liabilities: An OD Policy covers only damages to your own vehicle. Injuries, death and property damage to a third party are not covered.
 

2. Driving Under the Influence: Driving after consuming alcohol or other perception-altering drugs is not covered.
 

3. Legal Disobedience: Driving without following traffic rules or without carrying mandatory documents like a driving licence is not covered.
 

4. Wear and Tear: Wear and tear resulting from regular use is not covered under an OD Policy.
 

5. Racing: Damages resulting from taking part in illegal racing events are not covered under this policy.

 

Difference between the Third-Party Premium and Own Damage Premium

Below is a table highlighting the difference between Third-Party and Own Damage Premium.

 

Aspect	Third-Party Premium	Own Damage Premium
Coverage	Liabilities towards third parties (damage, injury, death).	Damages to the insured's own vehicle.
Legal Requirement	Mandatory by law in India.	Optional, but recommended for comprehensive coverage.
Cost	Generally cheaper.	Usually more expensive, varying by vehicle type, make, model, age, etc.
Policyholder's Protection	No protection for the policyholder’s vehicle.	Protection only for the policyholder’s vehicle.
Premium Calculation Basis	Insurance Regulatory and Development Authority of India (IRDAI) has set a fixed tariff based on a vehicle’s engine capacity.	The premium is calculated based on a vehicle’s IDV, location, age,  engine capacity, and other factors such as NCB, Add-Ons, etc.
Claim Settlement	Claim amount is paid to the third party.	Claim amount towards repairs/replacements is paid to the policyholder in case of a reimbursement claim or garage in case of a cashless claim.
Customisation	Not customisable.	Can often be customised with add-ons for additional coverage.
Renewal	Typically fixed premium rates.	Premium rates may vary at renewal based on NCB (No Claim Bonus) and any changes in coverage.

Factors Affecting Own Damage Premium

The following are the factors that influence Own Damage premium.

1. Engine Capacity: The vehicle’s engine capacity is one factor considered to compute the Own Damage Car Insurance Premium. The higher the engine capacity, the higher the premium payable. 
 

2. Insured Declared Value (IDV): IDV is the amount that will be compensated to the insured in the event of vehicle theft/loss. It can be selected at the time of policy purchase and will contribute to the premium.
 

3.Vehicle Age: The age of the car will be taken into account while calculating the OD premium. Generally, older vehicles attract a higher premium as compared to newer models.
 

4. Location: Location is considered for Car Insurance premium calculation. For this purpose, cities are categorised into Zone A and Zone B. Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, New Delhi, and Pune are Zone A cities. The rest are Zone B cities.

 
5. No Claim Bonus (NCB): NCB is a fixed discount that the insured is eligible for after completing a claim-free policy term. You can receive up to a 50% discount after completing five claim-free years.
 

6. Add-Ons: Add-Ons are extra coverages that you can opt for with an Own Damage Policy. The Add-Ons are chargeable. Therefore, the more of them you choose, the greater the cost.

 

How Own Damage Premium is Calculated

As discussed in the previous section, Own Damage Insurance premium is calculated based on engine capacity, vehicle age, and other factors. If you want to know the exact cost of an OD Policy for your car, we suggest getting a free quote on our website/app. Just click the Car Insurance icon, fill in the respective fields and select “Insure Now”. Finally, choose an OD policy and any required Add-Ons to generate a free quote.

 

How to Save on Your Own Damage Premium

Here are some insider tips on how to save on Own Damage Premium.

1.Voluntary Deductibles: A voluntary deductible is a set sum that you decide to pay out of pocket in the event that you file a claim. Your insurance will start contributing once this amount is paid. Opting for deductibles reduces the premium payable. But make sure you choose a reasonable amount so you will not be financially burdened.
 

2.IDV: IDV is the current market value of your vehicle that will be credited to you in the event of vehicle theft/loss. IDV impacts the premium payable. Fortunately, this amount can be customised. So, choose a reasonable IDV rather than choosing the highest IDV possible.
 

3.NCB: No Claim Bonus is a discount provided by insurance companies to customers who do not make any claims during the policy term. You can accumulate a maximum of 50% discount on the OD Insurance premium after completing five consecutive claim-free terms. So avoid making claims for minor damages to your car.
 

4.Add-Ons: Add-Ons are optional coverages that can be chosen if you require more coverage for your vehicle than is available in the base OD Car Policy. While Add-Ons can be advantageous, avoid choosing unnecessary Add-Ons as they will only increase the final bill during policy purchase.

 

How to Buy Own Damage Insurance from ShriramGI

Follow these three simple steps to buy Own Damage Insurance.

Step 1: Head to our website/app, select car insurance and fill in the requested details.

Step 2: Choose Own Damage Car Insurance and the necessary Add-Ons.

Step 3: Make an online payment for the selected coverages and receive your OD Car Policy.

Summing Up

Own-damage Car Insurance is a must for every car owner seeking financial protection for the vehicle against accident-related damages. We recommend buying an OD Car Policy, especially if you already have the mandatory Third-Party Car Insurance. While buying OD Car Insurance, it is important to understand the factors considered for premium calculation. Also, make use of the tips shared in this blog to reduce the premium payable for the OD Insurance Policy.

 

FAQs

1. What is Own Damage Car Insurance Premium?

Own Damage Car Insurance Premium refers to the amount you pay to buy Own Damage Car Insurance Premium. An OD Car Policy protects your vehicle against damages caused by accidents, theft, natural disasters, etc.

 

2. How is Own Damage Premium Calculated?

The Own Damage Premium is calculated based on factors such as the car’s engine capacity, age, location, and the Insured Declared Value (IDV).

 

3. What Factors Affect Own Damage Premium?

Key factors that impact the Own Damage Premium include the car's make, model, age, engine capacity, the Insured Declared Value and your city/location.

 

4. How Can I Reduce My Own Damage Premium? 

You can lower your Own Damage Premium by opting for a higher Voluntary Deductible, avoiding raising claims, and choosing only necessary Add-Ons.

 

5. When Should I Claim Own Damage Coverage?

If your vehicle sustains accident-related damages, you should file an own-damage claim. Before filing the claim, make sure to get estimates from authorised garages.