Conceptual · Article 7.3.20
The Standalone Own-Damage Policy.
India's Flexible, Annual-Only Cover for Your Own Vehicle.
Published as on 22 July 2026
A Standalone Own-Damage (OD) policy insures one thing: damage to your own vehicle — from accident, fire, natural calamity or theft — with no Third Party liability bundled in. IRDAI created it in 2019 to break OD free from the long-term Third Party cover that new vehicles are forced to carry, so owners could shop the OD portion competitively every single year. It is offered on an annual basis only, priced no differently from the OD slice of a comprehensive package, and can be bought from any insurer — as long as a valid Third Party policy is already in force. The Insured Declared Value sets your payout ceiling; a No Claim Bonus of up to 50% rewards claim-free years; and 18% GST rides on top of the premium.
Sept 2019
IRDAI Launch
Annual only
No Long-Term Option
Up to 50%
Max NCB Discount
TP Required
Not Road-Legal Alone
Executive Summary · Page 2
Executive Summary · 6 Findings
A Standalone OD policy answers a very specific problem the market created for itself. When new cars and two-wheelers were forced to carry three and five years of Third Party cover, the Own-Damage portion in a bundled package got locked in for the same term — killing annual competition on the part of the premium that actually varies. Decoupling OD restored the owner's power to renew, compare and switch every year. The catch: an OD policy is not, by itself, a legal insurance. It protects your car, not your liability to others.
Covers why IRDAI introduced standalone OD in September 2019, exactly what it covers and excludes, how the Insured Declared Value caps every claim, the depreciation schedule and Constructive Total Loss threshold, the No Claim Bonus and its portability, the annual-only rule, add-on covers, how OD claims are settled, the tax treatment of the premium, and six questions Indian vehicle owners ask.
Key Findings
Cover for your own vehicle, unbundled from liability.
A Standalone OD policy insures accidental damage, fire, theft and natural calamity to your own car or two-wheeler. It carries no Third Party liability. IRDAI introduced it via Circular IRDAI/NL/CIR/MOTOD/095/06/2019, effective 1 September 2019, letting owners buy OD and TP from different insurers.
Born to restore annual competition.
After the Supreme Court mandated long-term TP — three years for new cars, five for new two-wheelers, from September 2018 — bundled OD got locked in for the same term. Standalone OD lets the OD portion renew every year, so owners can chase a better price or better claims service without disturbing the TP policy.
It does not make you road-legal on its own.
The Motor Vehicles Act 1988 compels Third Party cover, not Own-Damage. A standalone OD policy can only be issued if valid TP already exists, or both are bought together; the OD document must record the TP insurer, policy number and dates. No TP, no legal driving — and no OD policy either.
IDV is the ceiling on every claim.
The Insured Declared Value — ex-showroom price less a prescribed depreciation, plus accessories — is the most the insurer pays on total loss or theft. Repairs above 75% of IDV trigger a Constructive Total Loss and the full IDV is paid. Under-declaring IDV to shave the premium directly shrinks a theft settlement, with no recourse.
NCB rewards you, and travels with you.
A claim-free year earns 20% off the OD premium, rising to 50% after five years. The bonus belongs to the person, not the vehicle: an NCB certificate (valid three years) carries it to a new insurer or from a package policy to a standalone one. One OD claim resets it to zero — unless an NCB Protector add-on is in force.
Annual only — and the premium isn't a tax break.
IRDAI prohibits multi-year standalone OD by design, to keep the switching option alive. Pricing matches the OD component of a package policy — no standalone penalty — plus 18% GST. For a personal vehicle the OD premium is not tax-deductible; only business-use vehicles claim it, under Section 37(1).
At A Glance
| Feature | Value | Detail |
|---|---|---|
| Introduced | 1 Sept 2019 | IRDAI circular |
| Covers | Own vehicle only | No TP liability |
| Tenure | Annual only | No long-term |
| Payout ceiling | IDV | Depreciated value |
| CTL trigger | Repairs > 75% IDV | Full IDV paid |
| Max NCB | 50% | 5+ claim-free years |
| GST | 18% | On premium |
| Tax on premium | Not deductible* | *Personal use |
Exhibit 01: Standard Compulsory Deductible
| Vehicle | Engine | Deductible |
|---|---|---|
| Private car | Up to 1,500cc | ₹1,000 |
| Private car | Above 1,500cc | ₹2,000 |
| Two-wheeler | Any | ₹100 |
*OD premium is not deductible for personal-use vehicles under any provision of the Income Tax Act, 1961; business vehicles claim it under Section 37(1). The compulsory deductible is borne by the policyholder on every OD claim and is separate from any voluntary deductible chosen for a premium discount.
The Opening · Page 3
The Opening
Motor insurance in India has always come in two halves that most owners never see separately. One half — Third Party — is the law: it pays for the harm your vehicle does to other people and their property, and the Motor Vehicles Act makes it compulsory. The other half — Own Damage — is a choice: it pays to repair or replace your own vehicle. For decades they arrived stapled together in a single comprehensive package. The Standalone OD policy simply un-staples them, letting you buy your own-vehicle cover from one insurer while your legal liability cover sits with another.
"A Standalone OD policy protects your car, not your conscience or your licence. It says nothing about the damage you may cause to others. That is the job of the Third Party policy the law insists you already hold — and without which the OD policy cannot even be issued."
Two Halves, Two Purposes
Why it appeared. From September 2018 the Supreme Court required every new car to carry three years of Third Party cover and every new two-wheeler five years, paid upfront. Inside a bundled package that also locked the OD cover to the same insurer for three or five years — freezing the one part of the premium that is genuinely competitive. IRDAI's answer, a year later, was to permit Own-Damage as a standalone, annually renewable product.
What it changed. The reform handed the owner an annual decision. Your long-term TP stays put; your OD can move every renewal to whoever prices the risk best or settles claims fastest. Since OD is where the money and the service quality actually live, that is a meaningful lever — but only if you understand IDV, NCB portability and the annual-only rule that keeps the door open.
Structure
Part I
Why Standalone OD Exists, Who Can Buy It & the TP Rule
Part II
What It Covers, IDV, Depreciation & the Premium
Part III
NCB, Add-Ons, Claims & SOD vs the Package Policy
Part IV
The Verdict: Flexibility, Used Correctly
Use If
✓ New vehicle with long-term TP
✓ You want to compare OD yearly
✓ A valid TP policy is in force
✓ You value insurer flexibility
Do NOT Rely On It If
✕ You have no TP cover at all
✕ You want a multi-year lock-in
✕ You expect liability protection
✕ You seek a tax deduction (personal)
Part I
Why the Standalone OD Policy Exists, Who Can Buy It, and the Third Party Precondition
How long-term Third Party rules froze the Own-Damage market for new vehicles; the 2019 IRDAI reform that decoupled the two; and the strict rule that no OD policy can be issued unless valid TP cover already runs alongside it.
Part I · Page 4
The Problem It Solved
A Market That Locked Itself In
From 1 September 2018 the Supreme Court required new cars to carry three years of Third Party cover and new two-wheelers five years, paid at purchase. In a bundled package the Own-Damage cover was locked to the same insurer for that whole term — so owners of new vehicles couldn't switch OD insurers even if the price or claims service was poor. Annual competition on OD simply vanished for new vehicles.
IRDAI's remedy was Circular IRDAI/NL/CIR/MOTOD/095/06/2019, effective 1 September 2019. It let every licensed general insurer sell Own-Damage as a standalone, annually renewable product — so an owner could source OD and TP from whichever insurers priced and served each best, and renew the OD leg every year regardless of how long the TP policy runs.
Who Can Buy It
The Third Party Precondition
No TP, No OD Policy
A Standalone OD policy can be issued only if the vehicle already holds valid Third Party cover, or if both are bought at the same time. The OD insurer must record the TP insurer's name, policy number, and start and end dates inside the OD document itself. A vehicle with no TP cover cannot receive a standalone OD policy in isolation — the two are legally linked even when commercially separated.
Package vs Standalone: the Two Halves
| Element | Own Damage | Third Party |
|---|---|---|
| Protects | Your vehicle | Others' loss |
| Legally required | No | Yes |
| Pricing | Market-set | Centrally fixed |
| Standalone tenure | Annual | 1 / 3 / 5 yr |
| Switch yearly | Yes | No (if long-term) |
The design insight is simple: keep the compulsory, price-fixed half wherever it is, and free the discretionary, competitively priced half to move every year.
Part II
What It Covers, the Insured Declared Value, and How the Premium Is Built
The perils inside an OD policy and the exclusions outside it; how IDV and its depreciation schedule set the payout ceiling and the Constructive Total Loss threshold; and why OD premiums are market-determined, deductible-bearing and GST-loaded.
Part II · Page 6
What's In, What's Out
Covered Perils
Accidental collision and impact; fire, explosion, self-ignition and lightning; burglary and theft; riot, strike, malicious and terrorist acts; earthquake, flood, cyclone, landslide and other natural calamities; and damage in transit by road, rail, waterway, lift or air. Coverage is identical to the OD component of a comprehensive package.
Not Covered
Third Party liability; wear, tear and mechanical or electrical breakdown; depreciation on replaced parts (unless zero-dep is bought); tyres/tubes alone unless the vehicle is damaged too; driving drunk or without a valid licence; consequential loss; and war, nuclear and radioactive perils.
Constructive Total Loss
If the cost of repairs exceeds 75% of the IDV, the vehicle is declared a Constructive Total Loss and the insurer pays the full IDV, subject to applicable depreciation on parts — waived if a zero-depreciation add-on is in force.
IDV & Its Depreciation Schedule
| Vehicle Age | Depreciation on IDV |
|---|---|
| Up to 6 months | 5% |
| 6 months – 1 year | 15% |
| 1 – 2 years | 20% |
| 2 – 3 years | 30% |
| 3 – 4 years | 40% |
| 4 – 5 years | 50% |
| Over 5 years | By mutual agreement |
IDV = (ex-showroom price − depreciation) + (non-standard accessories − their depreciation). Beyond five years, insurer and owner agree an IDV referencing current resale value.
How the Premium Is Built
Market-Determined, Not Fixed
Unlike TP, OD premiums are set by the insurer — driven by IDV, make/model/fuel, RTO zone, vehicle age, add-ons, NCB earned and any voluntary deductible chosen. IRDAI requires the pricing basis to match the OD component of a package policy, so there is no penalty for buying standalone. A compulsory deductible applies to every claim, and 18% GST is added on top.
Part III
No Claim Bonus, Add-Ons, Claims, and Standalone versus the Package Policy
How the No Claim Bonus rewards claim-free years and travels between insurers; the add-ons worth knowing; the OD claims sequence from intimation to settlement; and when a standalone structure beats a bundled comprehensive one.
Part III · Page 8
The No Claim Bonus Ladder
| Claim-Free Years | NCB on OD Premium |
|---|---|
| 1 year | 20% |
| 2 years | 25% |
| 3 years | 35% |
| 4 years | 45% |
| 5+ years | 50% |
NCB Belongs to You
The bonus attaches to the insured person, not the vehicle. Carry it to a new insurer — or between package and standalone policies — with an NCB certificate valid for three years. It resets to zero on any OD claim unless an NCB Protector add-on is held, and it never crosses vehicle categories: car NCB cannot apply to a two-wheeler.
How an OD Claim Settles
Intimate & document
Tell the OD insurer at once; file an FIR for theft or major accidents. Delay can reduce or void the claim.
Surveyor assesses
A licensed surveyor inspects the vehicle and confirms the cause and extent of damage.
Repair & settle
Cashless at a network garage or reimbursement elsewhere. Payout = repair cost − compulsory deductible − depreciation (unless zero-dep) − any voluntary deductible. Theft claims need a Non-Traceable Certificate, usually after 90 days.
Add-Ons Worth Knowing
| Add-On | What It Does |
|---|---|
| Zero Depreciation | Full part cost, no depreciation cut |
| Engine Protection | Water ingress, hydrostatic lock |
| Return to Invoice | Pays original invoice on total loss |
| NCB Protector | Shields NCB after one claim |
| Roadside Assistance | Towing, fuel, jump-start |
| Consumables | Oil, coolant, nuts and bolts |
Add-ons are offered at each insurer's discretion — IRDAI prescribes no mandatory list — so terms and eligibility vary. Zero-dep is usually the most valuable for newer vehicles, though most insurers cap it at five to seven years of age.
Standalone vs Comprehensive
| Factor | Standalone OD | Package |
|---|---|---|
| Own Damage | Yes | Yes |
| Third Party | No | Bundled |
| Mix insurers | Yes | No |
| Multi-year | No | Yes (new) |
| Best for | Yearly switchers | Single-insurer buyers |
Part IV
The Verdict
Flexibility on your own vehicle. Never a substitute for legal liability cover.
Part IV: The Verdict · Page 10
30-Second Summary
A Standalone Own-Damage policy covers only your own vehicle — accident, fire, theft and natural calamity — with no Third Party liability inside it. IRDAI created it in September 2019 to decouple OD from the long-term Third Party cover new vehicles must carry, so owners can renew and shop the OD leg every year. It is annual-only by design, priced no differently from the OD slice of a package, and can only be issued when a valid TP policy already exists.
IDV sets your payout ceiling and follows a fixed depreciation schedule; a Constructive Total Loss is declared once repairs top 75% of IDV. A No Claim Bonus of up to 50% rewards claim-free years and travels with you on a three-year certificate. Add-ons like zero-depreciation extend the base cover; 18% GST rides on the premium. And for a personal vehicle the OD premium buys protection, not a tax deduction — only business vehicles claim it under Section 37(1).
"The standalone structure answers one question — can I insure my own car on my own terms, and change my mind every year? Yes. It deliberately leaves the other question to a separate policy — am I legally covered for the harm I might do to others? A Standalone OD policy is the flexible way to protect your vehicle. It is never, on its own, the way to stay road-legal."
The Final Orientation
ADWIZR · July 2026
Decision Rules
Use Correctly As
✓ Annual OD for a long-term-TP vehicle
✓ A way to switch OD insurer yearly
✓ Cover paired with a valid TP policy
✓ NCB carried across on a certificate
Misuse Creates Risk
✕ As a stand-in for TP cover
✕ With a deliberately low IDV
✕ Expecting a multi-year lock-in
✕ Expecting a personal tax break
Three Misconceptions
What Owners Get Wrong
(1) "OD cover keeps me road-legal." No — only Third Party does; OD carries no liability. (2) "A low IDV just saves premium." It also slashes any theft or total-loss payout. (3) "The premium is tax-deductible." Not for a personal vehicle — only for business use, under Section 37(1).
vs the Package Policy
Flexible & Annual vs Bundled & Fixed
Standalone OD: your vehicle only, annual, insurer-switchable, TP bought separately — for owners who want to compare every year. Package: OD and TP together, one insurer, multi-year for new vehicles — for those who prefer a single relationship. Different tools, same underlying OD price.
Owner FAQ
Questions Indian Vehicle Owners Ask
Six questions, answered directly.
Owner FAQ · Page 12
Frequently Asked Questions
Q1 I bought a new car with a 3-year bundled TP. Can I now buy OD from a different insurer?
Q2 If I move to a Standalone OD with a different insurer, do I lose my NCB?
Q3 Does a Standalone OD policy make my vehicle road-legal on its own?
Q4 Is the Standalone OD premium the same across every insurer?
Q5 Can I claim a tax deduction on my Own-Damage premium?
Q6 My car is seven years old. Can I still buy a Standalone OD policy?
Key Terms & Definitions
Standalone Own-Damage (OD) Policy
A motor insurance policy that covers only damage to the policyholder's own vehicle — accident, fire, theft and natural calamity — with no Third Party liability. Permitted by IRDAI from September 2019, offered annually, and issuable only when a valid Third Party policy already exists for the vehicle.
Insured Declared Value (IDV)
The maximum the insurer will pay on a total loss or theft — the vehicle's current market value, calculated as ex-showroom price less a prescribed depreciation, plus accessories. It is the ceiling on every OD claim, so under-declaring it directly reduces a potential settlement.
Constructive Total Loss (CTL)
The point at which repairing the vehicle costs more than 75% of its IDV. The insurer then treats it as a total loss and pays the full IDV rather than the repair bill, subject to depreciation on parts unless a zero-depreciation add-on applies.
No Claim Bonus (NCB)
A discount on the OD premium for each claim-free year — 20% after one year, rising to 50% after five. It belongs to the insured person, transfers between insurers on a three-year certificate, and resets to zero on any OD claim unless an NCB Protector add-on is held.
Compulsory Deductible
The fixed amount the policyholder bears on every OD claim — ₹1,000 for private cars up to 1,500cc, ₹2,000 above 1,500cc, and ₹100 for two-wheelers. It is separate from any voluntary deductible chosen in exchange for a premium discount.
Zero Depreciation Add-On
An optional cover that removes the depreciation deduction on replaced parts at claim time, so the insurer pays the full repair cost. Most valuable for newer vehicles, and typically offered only up to five to seven years of vehicle age at the insurer's discretion.