Premium Factors, Cover Types and 2026 Rules
Comprehensive vs third-party vs standalone OD: which motor policy to renew
What liability-only, standalone own-damage and comprehensive motor policies cover in India, who each suits, the cost difference with a worked example, and common mix-ups.
There are three ways to insure a private car or two-wheeler in India. A third-party (liability-only) policy is the legal minimum and pays only for harm you cause to others. A standalone own-damage (OD) policy covers only your own vehicle and is valid only alongside a separate active third-party policy, typically the long-term TP bought with a new vehicle. A comprehensive (package) policy combines both. For most cars after the first three years, comprehensive is the default; liability-only makes sense mainly for old vehicles of low value that you could replace from savings.
This guide is part of how a car insurance premium is calculated. For the add-ons you can attach to OD cover, see the add-ons guide and the comparison table.
What each policy covers
| Third-party only | Standalone OD | Comprehensive | |
|---|---|---|---|
| Death or injury to others | Yes, unlimited | No | Yes, unlimited |
| Damage to others' property | Yes, up to the policy limit | No | Yes |
| Accident damage to your vehicle | No | Yes | Yes |
| Theft of your vehicle | No | Yes | Yes |
| Fire, explosion, lightning | No | Yes | Yes |
| Flood, cyclone, landslide, earthquake | No | Yes | Yes |
| Riot, strike, malicious damage | No | Yes | Yes |
| Damage in transit by road, rail, inland waterway | No | Yes | Yes |
| Compulsory PA for owner-driver | Required unless exempt | Not part of OD; attached to TP | Yes, unless exempt |
| Add-ons such as zero depreciation | No | Yes | Yes |
| Legal minimum on its own | Yes | No | Yes |
The list of insured perils above follows the standard private car package wording. Exclusions include normal wear and tear, mechanical or electrical breakdown, consequential loss, driving under the influence, driving without a valid licence and use outside the permitted purpose (for example, a private car used as a taxi).
Who each option suits
Third-party only
- Vehicles over about 10–12 years old with a low market value
- Owners who could replace the vehicle from savings after a theft or fire
- Vehicles used rarely and parked securely
Standalone OD
- Cars in their first three years and two-wheelers in their first five years, which already have long-term TP from the dealer
- Anyone whose TP policy is valid and runs separately
Comprehensive
- Every vehicle out of the new-vehicle TP period where the owner wants own-damage cover
- Financed vehicles: lenders generally require comprehensive cover for the loan term
Worked example: what the extra cover costs
Illustrative. A seven-year-old 1,197 cc hatchback with an agreed IDV of ₹2,40,000, NCB 50%.
| Policy | TP | OD after NCB | PA | Net | With 18% GST |
|---|---|---|---|---|---|
| Liability-only | ₹3,416 | – | ₹320 | ₹3,736 | ₹4,408 |
| Comprehensive | ₹3,416 | ₹2,160 | ₹320 | ₹5,896 | ₹6,957 |
The OD line assumes an illustrative basic rate of 1.8% of IDV (₹4,320) less 50% NCB. Comprehensive costs ₹2,549 more a year here. The question is whether you would rather pay ₹2,549 a year or bear the whole loss yourself if the car is stolen (up to ₹2,40,000), flooded, burnt or badly damaged in an accident you cause.
A rough test: divide the extra premium by the IDV. ₹2,549 ÷ ₹2,40,000 is about 1.1%. If you think the chance of a total loss or a large repair in a year is clearly higher than that, or you could not absorb the loss, keep comprehensive cover.
The standalone OD trap
A standalone OD policy is not valid on its own. It is sold only if the vehicle has an active TP policy, and the TP policy number and expiry are recorded on the OD schedule. Two problems come up at renewal:
- TP expiry is forgotten. A car bought in October 2023 had TP until October 2026. If the owner renews only standalone OD in October 2026, the car has no TP cover. Check the TP expiry every year.
- Mismatched dates. If the TP and OD expiry dates differ, you need to renew two policies on two dates. When TP ends, consider a comprehensive policy to bring both onto one date.
Switching from liability-only back to comprehensive
If you previously held only TP cover and now want comprehensive, the insurer will usually inspect the vehicle before OD cover starts, as with a break-in. Your NCB from earlier comprehensive years may still be usable if there was no gap of more than 90 days in your own-damage history; insurers differ on this, so ask before you buy.
Mistakes to avoid
- Buying standalone OD for a car whose TP has expired.
- Dropping to liability-only on a financed car, which can breach the loan agreement.
- Assuming liability-only cover pays for your own repairs after an accident caused by the other driver. You would need to claim from the other driver's insurer or through the Motor Accident Claims Tribunal; see third-party accident claims.
- Comparing a comprehensive quote with a standalone OD quote and treating the gap as a saving.
Related guides
Frequently asked questions
Is comprehensive insurance compulsory?
No. Only third-party cover is compulsory under the Motor Vehicles Act, 1988. Lenders may require comprehensive cover for financed vehicles.
Can I buy standalone OD for an old car?
Only if it has a separate valid TP policy. For an old car that has neither, buy a comprehensive or liability-only policy.
Does comprehensive cover flood damage?
Flood and inundation are insured perils, but engine damage caused by driving into water or restarting a flooded engine is often excluded unless you have engine protection cover.
Can I have TP with one insurer and OD with another?
Yes. That is exactly how standalone OD works.
Sources
- IRDAI — standalone OD framework and motor policy wordings
- Ministry of Road Transport and Highways — Motor Vehicles Act and TP rules
- Parivahan Sewa — check which insurance is recorded on your registration
