Understanding Own Damage Cover in Car Insurance

Introduction (Real Problem Based)

Many vehicle owners in Pakistan purchase car insurance policies without fully understanding what type of protection they are actually receiving. In most cases, drivers opt for third-party insurance coverage simply because it is more affordable than comprehensive insurance. However, they often assume that their policy will also cover damage to their own vehicle in case of an accident.

This misunderstanding may lead to financial stress when an insured driver is involved in a road accident and discovers that their insurance policy does not cover repair costs for their own vehicle. Third-party insurance typically provides compensation for damage caused to another person’s property or injury to third parties but does not include coverage for the insured vehicle itself.

This is where Own Damage Cover becomes relevant. Own damage protection is an important component of comprehensive car insurance that may provide financial assistance for repair or replacement costs if the insured vehicle is damaged due to an accident, natural disaster, or fire.

Understanding how own damage cover works may help vehicle owners make informed decisions regarding insurance coverage and manage unexpected financial risks more effectively.

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How Own Damage Cover Works

Own damage cover refers to the part of a car insurance policy that provides protection against damage to the insured vehicle. Unlike liability coverage, which focuses on damages caused to other people or property, own damage protection is specifically designed to compensate for loss or damage sustained by the policyholder’s vehicle.

This type of coverage may apply in situations such as:

• Road accidents
• Collisions with other vehicles or objects
• Fire-related incidents
• Theft or total loss
• Natural disasters such as flooding or earthquakes
• Acts of vandalism

When an insured vehicle is damaged due to any covered event, the policyholder may file a claim with the insurance provider. The insurer may then arrange for an inspection or survey to assess the extent of the damage. Based on the policy terms and the Insured Declared Value (IDV) of the vehicle, the insurance company may cover repair costs after deducting any applicable deductible amount.

Own damage cover is usually included as part of comprehensive insurance policies and may not be available under third-party insurance plans.

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Who Should Consider Own Damage Cover?

Own damage cover may be particularly beneficial for:

• Owners of newly purchased vehicles
• Individuals driving leased or financed cars
• Owners of imported or high-value vehicles
• Drivers who frequently travel in urban traffic
• Residents of flood-prone areas
• Vehicles with expensive spare parts

For vehicles that still hold significant market value, the cost of repairs after an accident may be substantial. In such cases, own damage cover may provide financial protection against unexpected expenses.

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Benefits of Own Damage Cover

Understanding the benefits of own damage protection may help policyholders evaluate the level of coverage required for their vehicle.

Key benefits may include:

• Coverage for accidental damage to the insured vehicle
• Compensation in case of theft or total loss
• Protection against fire-related incidents
• Coverage for certain natural disasters
• Reduced financial burden for repair costs
• Access to authorized workshops for repairs

These features may help vehicle owners manage the financial impact of unforeseen incidents involving their vehicle.

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Limitations of Own Damage Cover

Despite its advantages, own damage cover may have certain limitations:

• Wear and tear damage is typically excluded
• Mechanical or electrical breakdown may not be covered
• Driving without a valid license may result in claim rejection
• Policy lapse may terminate coverage
• Certain add-ons may require additional premium

Policyholders are advised to review policy terms carefully to understand the scope of coverage and exclusions.

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Estimated Cost in Pakistan

The cost of adding own damage cover to a car insurance policy in Pakistan depends on various factors such as:

• Vehicle make and model
• Engine capacity
• Registration year
• Market value
• Usage pattern

Approximate annual premium ranges may include:

• 800cc – 1000cc vehicles: PKR 15,000 – 30,000
• 1300cc – 1800cc vehicles: PKR 30,000 – 55,000
• 2000cc and above: PKR 55,000 – 100,000

Actual premium amounts may vary based on insurer policies and selected coverage options.

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Factors That Affect Own Damage Premium

Insurance providers may consider several variables when calculating the premium for own damage cover:

• Vehicle age
• Insured Declared Value (IDV)
• Engine capacity
• Claim history
• Geographic location
• Installed security features
• Optional add-ons

Vehicles equipped with tracking systems or maintained with a no-claim history may qualify for premium discounts.

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Real Example Scenario

Consider a vehicle owner who purchased a 2021 model sedan with a market value of PKR 2,500,000. The owner opted for comprehensive insurance coverage that included own damage protection with an annual premium of PKR 45,000.

During heavy rainfall, the vehicle was partially submerged in water due to urban flooding. The engine and electrical components sustained damage, and repair costs were estimated at PKR 350,000 by an authorized workshop.

According to the policy terms:

• Deductible amount: PKR 10,000
• Remaining repair cost: PKR 340,000

This amount was covered by the insurance provider, reducing the financial burden on the vehicle owner.

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Tips Before Buying Own Damage Cover

Before selecting own damage protection:

• Compare policy coverage options
• Verify the vehicle’s IDV
• Understand deductible terms
• Review policy exclusions
• Assess optional add-ons
• Evaluate claim procedures

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FAQs

Q1: Is own damage cover mandatory in Pakistan?
No, it is optional but may be beneficial for financial protection.

Q2: Does own damage cover include theft protection?
Coverage for theft may be included under comprehensive policies.

Q3: Can premium rates vary based on vehicle age?
Yes, older vehicles may have lower premiums.

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Conclusion

Own damage cover is an important component of comprehensive car insurance that provides financial protection for the insured vehicle in case of accidents, natural disasters, or theft. Unlike third-party insurance, it may cover repair or replacement costs for the policyholder’s vehicle.

Evaluating vehicle value, usage patterns, and risk exposure may help policyholders determine whether own damage cover is a suitable addition to their insurance policy.

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Author Bio

Written by: Ahmed Raza
Auto Insurance Research Analyst
5+ Years Experience in Vehicle Protection Planning
Email: ahmed@insuranceblog.website

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Sources / References

Investopedia – https://www.investopedia.com

Securities and Exchange Commission of Pakistan (SECP) – https://www.secp.gov.pk

State Bank of Pakistan (SBP) – https://www.sbp.org.pk

Ministry of Finance, Government of Pakistan – https://www.finance.gov.pk