Own Damage (OD)

Own damage (OD) is the part of a motor insurance policy that covers physical damage to the insured vehicle itself — as distinct from third-party liability, which covers damage the vehicle causes to someone else. OD is a market-priced, non-tariff component; insurers compete on premium, on the depreciation grid applied to spare parts, on network garage density, and on add-ons like zero-depreciation and engine protection. From 1 September 2020, IRDAI decoupled OD and TP policy terms so that you can buy a standalone OD cover alongside a long-term TP (mandatory for new vehicles — five years for two-wheelers, three years for cars).

This flexibility lets you match OD to the vehicle's remaining useful life and to shop each year for the OD quote. Worked example: a three-year-old Hyundai Creta with an IDV of ₹12 lakh might carry an annual OD premium in the indicative range of ₹9,000 to ₹14,000 before NCB and add-ons; adding a zero-depreciation cover for a three-year-old car can increase the OD premium by roughly 15% to 25%. OD claims follow a standard depreciation schedule for parts — 0% for items like glass, 30% for fibre / plastic / rubber parts, 50% for most metallic parts — applied to the replacement part cost.

A common misconception is that 'OD cover means 100% payout for all repairs'. In reality, OD pays the approved workshop labour cost plus part cost minus the standard depreciation, minus the policy deductible (standard deductibles are typically ₹500 to ₹2,500), minus any inadmissible items. For cars under five years old, a zero-depreciation (also called 'bumper-to-bumper') add-on is usually worth the extra 15% to 25% of OD premium because it zeroes out the part-depreciation deduction, which is where most of the gap between invoice and payout arises.

Another common misconception is that older cars do not need OD because 'the car is not worth much'. If the car is still your daily driver, a ₹60,000 repair bill on a five-year-old car is the same cash drain as on a new one, even if the IDV is modest. The economic case for OD continues until the annual OD premium exceeds roughly 10% of the car's IDV.

Related: IDV, no claim bonus, zero depreciation.