What is TP and OD in Insurance? A Detailed Guide

Buying motor insurance for your vehicle is mandatory by law in India. When purchasing motor insurance, you will come across two common terms – TP and OD. These refer to the two basic components of any motor insurance policy – third party liability cover and own damage cover.

Understanding what TP and OD in motor insurance means is crucial to make an informed decision while buying or renewing your policy. This comprehensive guide will explain TP and OD insurance in simple terms along with their key differences, benefits, and limitations.

What is Third Party (TP) Insurance?

A third party motor insurance policy provides coverage against legal liabilities arising due to accidental damage caused to a third party individual or property.

For example, if you accidentally hit another person or vehicle and they suffer financial losses due to it, your TP policy will pay for their loss as per policy terms. This ensures you are protected from high out-of-pocket expenses related to third party damage and legal cases.

Some key features of TP motor insurance are:

• It is mandatory by law to have a valid TP policy when driving any motor vehicle in India. Driving without one can lead to fines and penalties.

• TP policy only covers liabilities arising from damage to third party person or property. Any own damage is not covered.

• For new private cars, TP cover should be for 3 years. For new two-wheelers, it should be 5 years.

• Premium for TP policy is determined by the insurance regulator IRDAI and remains constant across insurers.

• Add-ons and customizations are not available in TP policy.

What Does TP Insurance Cover?

A standard TP motor insurance policy covers the following:

• Third party bodily injury – Medical expenses, disability or death of third party individuals in case of accidents involving your vehicle.

• Third party property damage – Repair or replacement costs if a third party vehicle, building, etc. is damaged.

• Personal accident cover – Compensation for disability or death of owner/driver as per policy limits.

• Legal liabilities – Any compensation awarded by court for third party damage due to accident involving your vehicle.

Limitations of TP Motor Insurance

While TP cover is mandatory, it has certain limitations:

• It does not cover any damage to your own vehicle after an accident – only third party damage is covered.

• TP insurance amount is fixed, you cannot increase it by paying higher premiums.

• Add-ons like zero depreciation, consumables, etc. are not available.

• TP premium is regulated and remains same across all insurers for same vehicle.

What is Own Damage (OD) Insurance?

While your TP policy covers liabilities arising from damage to third party, own damage (OD) insurance provides coverage against damage or loss to your own vehicle.

For example, if your car suffers major dents and scratches after an accident, or is stolen, your OD cover will pay for repair or replacement costs as applicable.

Some key things to know about own damage insurance are:

• OD cover is optional – you can just buy standalone TP if you want to lower premiums.

• Both third party and own damage can be covered under a bundled comprehensive motor policy.

• OD only covers your vehicle damage, not any third party damage.

• Insurers can set their own OD premium based on vehicle, location etc. so premiums can vary.

• Many useful add-ons like zero depreciation, engine protector etc. can be added to enhance OD cover.

What Does OD Motor Insurance Include?

A standard own damage motor insurance policy provides the following coverage:

• Accident cover – Repair costs arising from damage to own car/bike due to on-road accident.

• Theft cover – Cost to replace your vehicle in case it is stolen. Applicable even if stolen parts are recovered later.

• Natural calamity – Damage from floods, storms, earthquakes, etc. is covered under OD.

• Man-made incidents – Riot, strike, malicious acts etc. causing damage to your own vehicle.

• Fire damage – Loss or damage due to fire, explosion of gas tank etc. is covered by OD insurance.

Key Benefits of OD Motor Insurance

Some useful benefits of own damage motor insurance are:

• Comprehensive protection – When combined with TP, OD cover gives complete protection from all motor-related losses.

• Insured declared value (IDV) – You can fix IDV at time of purchase to get right compensation.

• Depreciation cover – Zero depreciation add-ons allow you to claim full repair amount.

• Enhanced protection – Add-ons like engine protector, consumables, etc. further boost your coverage.

• Cashless repairs – OD insurance allows cashless repairs at authorized garages in select locations.

Limitations of Own Damage Motor Insurance

While very useful, OD insurance also comes with some limitations such as:

• Third party damage not covered – Only own vehicle damage is covered under OD insurance.

• Insurer approval required – Add-ons, repairs, etc. need prior consent and approval from insurance provider.

• Premium may be high – OD premium is set by insurer so can be higher than TP-only coverage.

• Deductibles – You may have to bear a certain deductible amount per claim out of pocket.

• Depreciation – Unless zero depreciation add-on is opted, claim amount is subject to depreciation deduction.

Key Differences Between TP and OD Motor Insurance

Who Should Buy OD Insurance?

While TP cover is mandatory, own damage cover is optional. Here are some scenarios when opting for OD cover can be beneficial:

• You drive an expensive or luxury vehicle – OD cover ensures you can get it repaired in case of mishaps.

• You live in an area prone to accidents or vehicle damage – OD will provide financial protection.

• You want protection from theft – OD insurance also includes cover for vehicle theft.

• You want complete coverage – Combining OD and TP gives comprehensive protection.

• You want flexibility of add-ons – OD insurance allows useful add-ons to customize your policy.

• You do not want to pay any repair costs from own pocket – OD insurance makes this possible when required conditions are met.

How to Choose Between TP and OD Insurance?

Follow this step-by-step process to decide whether you should go for third party only, own damage only, or a bundled