Over the years, cars have maintained their status as one of the prized possessions in our lives, having an emotional value attached to them and, at times, seen as representative of owner’s personality. Hence, every effort is taken to maintain this asset in its best condition. However, accidents, thefts, and natural disasters are unpredictable & can occur anytime, causing significant financial loss. While no one wants to think about the possibility of their vehicle being damaged or stolen, it's important to be prepared for such situations. One way to protect yourself financially is by having an Own Damage (OD) cover as part of your vehicle insurance. OD cover is designed to provide financial protection in the event of damages to your vehicle caused by unforeseen circumstances.
In other words, if you have an Own Damage cover, your insurance company will compensate you for repairing or replacing your vehicle if it is damaged or lost due to one of the covered events.
In this article, we'll explore why it's vital to have OD cover and how it can help you in case of an unexpected incident.
Who Should Buy an OD Cover?
Anyone who owns a vehicle and wants to protect themselves financially in case of damages to their car should consider buying an OD cover. Having an OD cover is important for every car, irrespective of its age, as the cost of repairing or replacing such car after an accident can be substantial & it keeps on increasing every year with inflation. Additionally, an OD cover can be handy if you live in an area prone to natural disasters such as floods or earthquakes.
In India, having an OD cover is not mandatory by law. Still, it is strongly recommended for vehicle owners who want to protect themselves financially in case of damage to their vehicle.
Due to the unpredictable nature of accident severity and high cost of vehicle repairs post an accident, an OD cover is a wise protection to have, and with a typical cost in the range of 0.8% to 1.5% of the car value, it’s not expensive at all. Further, considering its benefits, many lenders insist borrowers to have an OD cover as part of their vehicle financing agreement.
Importance of Insurance for Your Vehicle
Here are some of the critical reasons why vehicle insurance is essential:
· Protection against financial loss: Vehicle insurance provides financial protection in case of loss of or damages to your vehicle caused by accidents, theft, fire, or natural disasters. Without insurance, the burden of repair cost could be substantial on your pockets. Having insurance helps you avoid financial stress and hardship in case of an unexpected incident.
· Legal compliance: In India, having third-party vehicle insurance is mandatory by law, and driving without insurance can result in fines, penalties, and legal consequences. So, having insurance is important not just for financial protection but also for legal compliance.
· Personal liability coverage: Vehicle insurance not only covers damages to your vehicle but also provides coverage for third-party liability, i.e., damages or injuries caused to other people or their property due to an accident involving your vehicle. This coverage can protect you from costly lawsuits and legal proceedings.
· Personal Accident coverage: This cover helps by providing compensation in cases where the driver or passengers suffer disability, or death caused by accidents involving your car.
· Enhancements to OD cover: Vehicle insurance protection can be further strengthened by way of opting for add-ons, which are curated considering the specific needs of each car/owner.
· Peace of mind: While one should always be careful during driving, knowing that you have insurance protection for your vehicle gives you peace of mind and enhances the joy driving without worrying about the financial consequences of an accident.
A Brief Overview of Standalone Own-Damage Cover
Standalone Own Damage (OD) Cover is a type of insurance policy that covers damages to your vehicle caused by accidents, theft, fire, or natural disasters. Option of buying standalone OD cover can be exercised when the vehicle is already insured for Third Party (TP) risks under a long-term policy. Here are some of the things that may be covered in a standalone OD cover:
· Accidental damage: If your vehicle is involved in an accident, a standalone OD cover may cover the cost of repairing or replacing your vehicle, depending on the extent of the damage.
· Theft: If your vehicle is stolen, a standalone OD cover may provide coverage for the cost of your vehicle, depending on the policy terms and conditions.
· Fire: If your vehicle is damaged by fire, a standalone OD cover may cover the repair or replacement cost, depending on the policy terms and conditions.
· Natural disasters: If your vehicle is damaged by a natural disaster such as a flood or earthquake, a standalone OD cover may cover the cost of repairing or replacing your vehicle, depending on the policy terms and conditions.
· Optional add-ons: Standalone OD often comes with a wide range of optional add-ons such as engine protection, zero depreciation cover, roadside assistance, Gap Value/Return to Invoice value (RTI), EMI protection etc. which broaden the coverage and benefits.
To Sum Up
An Own Damage (OD) cover is crucial for financial protection against unexpected damages to your vehicle and providing peace of mind. Whether it's accidental damage, theft, fire, or natural disasters, Own Damage coverage can help cover the costs of repairing or replacing your vehicle. It's important to carefully review the policy terms and conditions and choose a policy that best meets your needs and budget. With the right combination of OD and add-on covers, you can be rest assured that your vehicle is protected and has the necessary coverage to avoid financial hardship in an unexpected incident. So, if you haven't already, consider purchasing an OD cover for your vehicle to ensure you are adequately protected.
Udayan Joshi is President-Product, Underwriting & Reinsurance, Liberty General Insurance.