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What is OD (Own Damage) in Insurance?
OD (own damage) is the damage caused to the policyholder’s insured vehicle. A motor insurance policy providing OD coverage will compensate the policyholder against any damage caused to his own vehicle.
This content piece will aim to explain the concept of OD in insurance by discussing the following topics:
• What is OD Coverage in motor insurance?
• Example of OD in motor insurance
• How is OD Premium Calculated?
• OD Vs Third-Party insurance
What is OD Coverage in motor insurance?
An own damage (OD) motor insurance policy will provide coverage to the policyholder if his insured vehicle is damaged, stolen, vandalized, totaled, etc. The insurance company will either provide a cashless claim settlement or will reimburse the insured at a later date.
OD coverage is optional in India and car owners can either choose to purchase a comprehensive motor insurance policy (optional) or a third-party motor insurance policy (mandatory).
If a person has bought a comprehensive policy, he/she does not need to buy the mandatory third-party policy.
Example of OD in motor insurance
Let us assume Mr. Jayesh bought a comprehensive motor insurance policy for his new Honda City. A few months pass by and Mr. Jayesh becomes involved in a minor accident. His car’s windscreen is damaged and needs replacement. Mr. Jayesh informs the insurance company about this accident and the company reimburses him for the repair cost of the car. This is an example of OD coverage in motor insurance.
How is OD Premium Calculated?
The OD premium is calculated based on the following factors:
• Age of vehicle
• Make and model of the vehicle
• Owners age and profile
• IDV of the vehicle
• Area of the vehicle
OD Vs Third-Party insurance
OD insurance is also commonly known as comprehensive motor insurance. This is where the owner and the third-party are both covered.
| Own Damage (OD) | Third-Party | |
|---|---|---|
| Coverage | Covers only the owner’s own vehicle. | Covers only the opposite person’s damage/loss. |
| Whether compulsory | No | Yes. Third-party motor insurance is compulsory under the Motor Vehicles Act. |
| Cost | It generally costs more than third-party insurance as it covers both the owner and the third-party. | It is cheaper compared to comprehensive insurance. |
| Customizations | Customizations and riders can be opted under this policy. | No. This is a standardized policy |