HomeBusinessBreaking Boundaries: IRDAI’s Standalone Own Damage Motor Insurance Policy Approval

Breaking Boundaries: IRDAI’s Standalone Own Damage Motor Insurance Policy Approval

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Beginning on September 1, 2019, the Insurance Regulatory and Development Authority of India (IRDAI) will permit owners of both new and old vehicles (cars and bikes) to obtain stand-alone damage insurance coverage at the time of policy purchase and policy renewal. Formerly, owners of both new and old vehicles had to buy third-party car insurance and an own-damage policy. It is imperative to acknowledge that, according to the Motor Vehicles Tariff, 2002, all vehicle owners must maintain a third-party (TP) motor insurance policy. #

Car owners can now purchase or renew their motor insurance policy with more flexibility thanks to the option for a stand-alone own-damage insurance policy. Firstly, they can buy an OD cover later than a TP policy, and if they choose, they can buy it from a different insurance company. In the past, a car was forced to purchase an OD and TP cover from the same insurer.

The table provides a concise overview of the differences between Third Party Cover and Own Damage Cover based on coverage and the availability of add-ons.

 

Aspect Third-Party Cover Own Damage Cover
Coverage Only covers third-party liabilities, including life and property (up to Rs. 7.5 lakh). Solely addresses damages the insured’s vehicle suffered in an accident, theft, or any other mishap.
Availability of Add-ons No availability of add-ons. Offers a range of add-ons such as zero depreciation cover, engine cover, etc., allowing for customisation and additional protection.

 

Why Is Own Damage Insurance Coverage Important?

Acquiring your car’s own-damage motor insurance policy is advised, if not required. With an OD cover, your insurer will pay for any losses or damages your insured party’s car sustains in the event of a fire, accident, theft, natural or artificial disaster, or other unfavourable circumstances. You can avoid taking on the financial burden of having your car fixed by getting an OD cover.

Impact Of Stand-alone OD Coverage Introduction On The Car Insurance Sector

The level of competition among motor insurers will rise with a stand-alone own-damage policy. In the past, to satisfy the legal requirement of TP coverage, car owners would typically purchase a motor insurance policy from an insurer with a relationship with their car dealers. But now that a stand-alone OD cover has been introduced, car owners will have more time to shop around and buy the ideal OD cover for their needs later than they would have to buy a TP policy. As a result, insurers will be pressured to create more customer-focused OD coverage. Insurers may reduce the OD premium to draw in more clients due to their heightened competition. You can estimate the costs of premiums using a vehicle insurance calculator. Claims are subject to terms and conditions set forth under the motor insurance policy. *

The stand-alone OD cover is anticipated to benefit car owners by giving them more options when purchasing their policy and increasing the appeal of vehicle insurance rates.

*Standard T&C Apply

Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.

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