What Is OD and TP In Insurance

Purchasing a new car or a new bike? It is indeed a proud moment for you and your family. Now comes the essential part “insurance paperwork”. You have thoroughly checked your vehicle’s features, look and fee, and average everything but have gone through the insurance math work. If not, we are here to assist. You will often see two terms mentioned in your insurance paper: OD and TP.  Your premium is divided into these two parts. If you are scratching your head wondering what is OD and TP in your insurance. Let us break these down for you into simple terms so you can choose the right protection for your ride.

Understanding TP: The Legal Shield (Third-Party)

Third-Party insurance is the basic cover that the Government of India makes compulsory. If you drive a vehicle on public roads, you must have this.

Think of TP as your “social responsibility” cover. If you accidentally hit someone else’s vehicle or cause an injury to a person on the road, this insurance pays for their losses. It covers:

• Damage to someone else’s property.
• Physical injury or death of a third person.
• Legal liabilities arising from the accident.

However, TP insurance does not cover a single rupee of damage to your own vehicle.

Understanding OD: Your Personal Safety Net (Own Damage)

Own Damage (OD) insurance is all about you and your vehicle. The damages done to your personal vehicle are compensated under this plan. While the law doesn’t force you to buy it, your wallet will thank you if you do. It covers:

• Accidental damage to your vehicle.
• Theft or total loss.
• Damage from fire, lightning, or explosions.
• Natural disasters like floods or earthquakes.
• Man-made trouble like riots or strikes.

OD is optional by law, but it is practically essential. Without it, even a small scratch at a busy traffic signal could cost you thousands out of your own pocket.

Why You Need Both (Comprehensive Insurance)

While purchasing “Comprehensive Insurance,” you will essentially be purchasing both OD and TP. This is the best choice that you can make when protecting yourself against unforeseen expenses.

Also, do not forget the No Claim Discount. In case you have OD coverage and do not make any claims in a year, you will receive a discount on the next premium you pay. But this discount will apply only to the OD part and not the TP part.

The TP rate is set by the government through IRDAI according to the engine capacity. The OD rate, on the other hand, varies between different companies.

Final Words

In case you have an old car that you do not use often, then you may just use TP to comply with the law. However, when you have a new car or bike, OD will be a major risk to skip. One small accident could cost you thousands of rupees at the service center.

When you renew your policy, next time, do not look at the price and consider the coverage. Ensure that your OD cover is robust enough to cover your asset./