Third-Party vs. Own-Damage Car Insurance

If you own a vehicle, you must not neglect the aspect of car insurance, as it offers peace of mind and financial protection in unforeseen situations such as theft, accident, etc.

Own-damage and third-party car insurance are two terms that you will probably come across when searching for a motor policy for your car’s protection. These are generally the most basic policies that insurance companies offer for a vehicle’s financial security.

The following lines will discuss how these two policies differ so that you can make an informed choice for your car’s protection.

Third-party Insurance vs. Own-damage Insurance

Here is a comparison of own-damage insurance and third-party insurance to help you better understand how these two motor policies differ from each other.

Parameter	Third-party Policy	Own-damage Policy
Coverage	It provides financial coverage against third-party liabilities.	It provides financial coverage to the policyholder’s insured car.
What it excludes	Own-damage coverage	Third-party coverage
Is it enough?	This policy alone may not be enough as you will still need financial protection for your own car from expenses arising out of repair for car damage.	Since this policy cannot be purchased alone, you will have a third-party policy along with this policy for extensive financial coverage.
Is it mandatory?	Yes	No
Customisation option	No customisation is possible.	Yes, you can customise it by including add-ons that meet your needs.
Policy validity	It is mandatory to purchase a 3-year third-party policy for a new car, after which you can continue purchasing this policy annually.	It comes with 1-year and 3-year validity options.
Scope for price comparison	Not available, as the IRDAI sets the cost, which cannot be changed by insurance companies.	You can visit different insurers online to compare their prices and select the one that is within your budget.

When Should You Opt for a Third-party Car Policy?

This own-damage insurance vs third-party insurance table shows that while third-party insurance is compulsory, it may not always be enough for a car owner. Here are some situations in which this policy is sufficient for a car owner:

• When you must comply with the law and drive your car legally in the country.
• When you want to spend as little as possible on your car policy, you can avoid paying hefty fines to the traffic police for not owning a valid car policy.
• When you drive safely but occasionally.

When Should You Opt for an Own-damage Car Policy?

Again, the table on own-damage vs third-party insurance shows that an own-damage policy is not mandatory but is required for your car’s financial safety. Here are some situations in which this policy should be purchased:

• When you are looking for extensive or comprehensive coverage from your car policy, you can select this motor policy along with the third-party policy.
• When you are living in areas that are prone to natural disasters like floods or cyclones or where car theft is common, you can opt for this policy as it offers coverage in both these cases.

Conclusion

While the comparison is not drawn to imply that one policy is better than the other, the solution to your problem can be opting for a comprehensive car plan that will help you adhere to the law while protecting your car from various unexpected situations. The final decision should be based on your budget and coverage needs.