Own damage cover in car insurance is a very useful form of insurance protection, as it safeguards the insured vehicle from damages. It is also referred to as collision insurance or self-damage insurance by some. The two areas that are included in this coverage are damage to the insured vehicle in accidents and theft/total loss.
In India, all car owners are required to be equipped with a minimum level of insurance coverage. This is referred to as the third-party liability insurance. Although own damage cover is not mandated by the law, it is a very useful cover to have for your prized possession.
The Importance Of Own Damage Cover
When looking to buy car insurance, you have the option to choose a limited cover plan or one with extensive car insurance coverage.
The limited cover plan is the third-party liability insurance or liability-only plan. The main disadvantage of owning this type of car insurance policy is the fact that it does not offer damage protection to the insured vehicle itself. A liability-only plan protects the car owner from legal liabilities arising out of an accident. This includes liability for third-party injuries, death, or property damage.
The coverage under a comprehensive car insurance plan can be divided into the following parts:
- Third-party liability cover - This coverage is similar to that offered by a standalone liability-only plan, as detailed above.
Own damage cover - This cover protects the vehicle from the following events:
- Accidental damages
- Damages while in transit via rail, road, inland waterways, lift, etc.
- Theft and vandalism
- Natural calamities such as hurricanes, landslides, and floods
- Man-made disasters such as riots, strikes, etc.
- Personal accident cover to the owner/driver of the vehicle
In addition, the coverage under a comprehensive car insurance plan can be boosted through the use of add-on covers that can be purchased from the insurance company itself.
As you can see, the benefits of buying a comprehensive car insurance package (that includes the own damage cover) far outweigh those of buying a standalone third-party liability policy. However, the package policy will be more expensive than a third-party liability standalone plan.
How Are The Premiums For Own Damage Cover Determined?
The method of determining the premium for the third-party liability insurance coverage is straightforward. The Insurance Regulatory and Development Authority of India (IRDA) publishes fixed rates for third-party liability premium on an annual basis. These rates depend upon the engine capacity of the insured vehicle. There is no variable component involved in this calculation.
However, the calculation of the premium for own damage cover is slightly more complicated. The insurance company provides the customer a quote based on several factors, some of which are as follows:
- The age and profession of the car owner
- The area of registration of the vehicle
- The age and Insured Declared Value (IDV) of the vehicle
- The car’s make and model
- The safety equipments installed in the car
- The car owner’s membership in recognised automobile associations across India
- Other discounts and benefits the owner/driver is eligible for
- Add-on covers opted for
- Voluntary deductibles that the car owner opts for at the time of policy purchase
The car insurance company takes into account all the above factors and adds the third-party liability premium to provide you the quote for the comprehensive/package policy.
How Much Protection Does Own Damage Cover Offer Me?
The amount that your car insurance company pays you in the event of an own damage claim depends on your vehicle’s Insured Declared Value, the deductibles opted for, and the make/model of the vehicle. It can be safely assumed that the payout you receive will be a fair market value of the vehicle.
What Are The Documents Required For Filing An Own Damage Claim?
When raising an own damage claim, it is necessary to submit the following documents:
- Copy of the car’s insurance policy
- FIR filed with the nearest police station (in the event of theft or accidental death of a party involved)
- The registration certificate of the vehicle
- Copy of the driving license of the driver
- Bills provided by the garage where the vehicle was repaired (in the case of reimbursement claim)
- Photos of the accident spot
In conclusion, in addition to providing third-party liability coverage, the comprehensive car insurance plan safeguards the insured vehicle and the car owner. This is, hence, a very useful policy to purchase if you are not cost conscious or on a budget.
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GST Update: GST of 18% is applicable on car insurance effective from the 1st of July, 2017