Difference Between OD And TP Insurance: Which Is More Important?

Keep in mind that opting for only a TP liability policy means leaving your car exposed to potential losses. If you want comprehensive coverage for your car, consider getting the OD policy as well.
Insurance, Third-party Insurance, Own Damage
Insurance, Third-party Insurance, Own Damage

Insurance is like a safety net for your vehicle, providing financial protection in times of unforeseen events. Two fundamental components of motor insurance, Own Damage (OD) and Third-Party (TP) coverage, play distinct roles in safeguarding your interests on the road. Understanding the difference between the two can help you make informed decisions about your insurance needs.

OD Insurance 

OD insurance, as the name suggests, is tailored to cover the repair costs of your own vehicle. Whether it's an accident, theft, or natural disaster like floods or earthquakes, OD insurance steps in to alleviate the financial burden of repairing or replacing your car. This standalone policy ensures that you don't have to dip into your pocket to fix damages caused to your vehicle.

On the flip side, a policy lacking OD coverage, often referred to as 'third-party liability insurance,' only covers the costs you owe to a third party in case of an accident. If you accidentally damage your neighbor's car, your insurance will cover their repairs, but you'll be left to handle the expenses of fixing your own vehicle.

Advantages Of OD Car Insurance

Here are the benefits:

  • Covers car damage from accidents

  • Provides theft protection

  • Coverage for natural or man-made disasters

  • Protects against fire damage

  • Option to personalize the plan with additional features.

Comprehensive Policy

The best of both worlds lies in a comprehensive policy, which combines both OD and TP sections. This holistic coverage ensures that you are financially protected from damages to your vehicle as well as liabilities towards third parties. It's a comprehensive approach to insurance that leaves no room for uncertainties.

TP Insurance

TP Insurance, sometimes called 'act-only' insurance, is a statutory requirement for all vehicle owners according to the Motor Vehicle Act. It primarily covers damages, injuries, or loss caused to a third party by your vehicle. While it doesn't provide coverage for your vehicle, TP insurance offers financial assistance to pay for the repairs of the third party's property or cover medical expenses for injuries caused by your vehicle.

Advantages Of TP Car Insurance

Here are the benefits:

  • Covers damage to other's property

  • Provides coverage for third-party medical expenses

  • Offers compensation in case of death

  • Covers legal liabilities when you accidentally cause harm to someone or damage their property.

Difference Between OD And TP Insurance: 

According to Nitin Kumar, head of motor insurance at Policybazaar.com, the difference between OD and TP motor insurance policies lies in the coverage that they offer. “A TP motor insurance policy is mandated as per the Motor Insurance Act and provides coverage for damages and injuries caused to a third party by the policyholder. On the other hand, OD insurance provides coverage for damage or loss to policyholders' vehicles due to accidents, theft, natural disasters, etc. In the case of an accident with your vehicle, your insurer will pay for the damages. Apart from accidental damages, your insurer will also pay for damages due to fire, floods, earthquakes, and other natural calamities, along with theft,” Kumar said. 

“It's recommended that every vehicle owner must opt for a comprehensive motor insurance policy that covers them for both TP damages and their ODs. To enhance the protection of their vehicle, one can also choose to buy different add-ons that provide different extents of protection. Some of these add-ons are Zero Depreciation Cover, Return to Invoice, Roadside Assistance, Engine Protection, and Consumables, etc,” he added. 

According to experts, for broad protection, it's advisable to get both the OD policy and a TP liability plan. This ensures comprehensive coverage for nearly all potential losses while driving. If you live in areas prone to theft or floods, the OD car Insurance policy is a good choice, as it covers theft and damage from natural disasters. Opting for a comprehensive car insurance policy is a smart move when you want coverage for car damages and legal compliance simultaneously.

Animesh Das, Chief Underwriting Officer at ACKO said, “In India, it is a legal requirement for every vehicle to have a TP insurance policy which typically includes compensation for death and coverage for legal liabilities arising from accidental injury or property damage. On the other hand, OD car insurance addresses specific financial losses faced by the car owner such as car damage from accidents, theft, protection against natural or man-made disasters, and fire damage, and offers customization options with add-ons.” 

“For comprehensive coverage, car owners seeking extensive protection should consider purchasing both the OD policy and a TP liability plan. This combination ensures holistic coverage against almost all losses associated with driving a vehicle,” Das added. 

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