Many drivers who are looking to insure a new car insurance find several offers that include the Own Damage guarantee and are not very clear about what it means. But if we talk about All Risk Insurance , it is possible that they will have a clearer idea of what we are talking about. Although it is convenient to clarify the terms and know what relationship exists between this type of Automobile Insurance and the coverage. That’s what this post is about.
Own Damage coverage is what makes the difference between an All Risk policy and an Extended Third Party Insurance . In fact, the coverage for Personal Damage is exclusive to the All Risk Insurance policies and cannot be contracted as an extra in other types of Insurance. However, consider what the all-risk insurance covers, since they may include more coverage, in addition to Own Damage.
Having this protection covers the damage suffered by the vehicle in an accident in which there is no other vehicle involved, but always within certain limits.
Although the name Personal Damage may make us think that it also covers physical damage suffered by the driver, the truth is that it is a guarantee that exclusively covers material damage to the insured car. Driver injuries and injuries would be covered by Driver’s Insurance .
However, these Insurances are not usually cheap, although they are highly recommended to insure new cars , up to two and three years old. Let’s see specifically what Own Damage covers:
What does the Own Damage guarantee cover?
If our Automobile Insurance includes Personal Damage, we will cover the repair of the damage caused to our own vehicle as a result of an accident.
In these cases, the accident would be motivated by an external cause, produced instantly or violently and, in any case, completely beyond the control of the insured.
Damage to own vehicle
In this way, this guarantee covers the damages caused by ourselves to our vehicle.
For example, an exit from the road in which the car is damaged or those light sheet metal bumps or scratches that are so frequent when parking in a parking lot would be covered by this coverage. And in the same way, the Own Damage guarantee would respond in case of causing damage to our own vehicle in an accident for which we are responsible.
Damage to the car by an unknown person
Another circumstance in which this coverage is activated is when we cannot claim damages caused by a third party, because they do not identify themselves.
For example, if our car suffers acts of vandalism (scratched sheet metal, shattered rear-view mirrors or broken windshield wipers) and it is not possible to identify the person responsible, a Basic Insurance would not cover these damages. With the Own Damage coverage, the insurer assumes the repair of the vehicle in these situations.
Car damage from hail
Regarding damage caused by meteorological circumstances, the Own Damage coverage covers hail , since the rest are usually covered by the Insurance Compensation Consortium.
The Total Loss and Own Damage coverage
One of the reasons that leads us to include the Personal Damage guarantee in our policy is the fear of losing the car in an accident . Having an All Risk Insurance gives us the peace of mind of knowing that the insurer is committed to indemnifying the total loss of the vehicle in an accident , although it is very important to bear in mind that not all insurers offer the same coverage for Personal Damage.
Knowing what compensation the insurer will pay if a total loss occurs is essential before signing a policy with Personal Damage. Especially if the insured car has just been released.
The Personal Damage coverage offered by the best insurers normally offers compensation with a new value if the damaged vehicle is not more than two years old. However, there are companies whose compensation is calculated according to the market value of the vehicle six months after its registration or from the same day the car leaves the dealership.
After that first or second year, depending on the case, the usual practice of some companies is to indemnify based on market value and in other cases based on improved market value .
Exclusions of the Own Damage guarantee
An All Risk Insurance is the most complete policy to insure a car , a motorcycle or a truck. But there are always situations that are beyond the coverage of the Insurance, that is, exclusions. And Personal Damage is no exception.
There are cases that the Own Damage coverage does not cover , either because it does not fall within the guarantee or because, simply, they are covered by other coverage or Insurance. Let’s look at some examples.
Car breakdowns are not covered by All Risk Insurance
The Own Damage guarantee can get us out of a good jam on the road, but contracting this coverage does not mean that the insurer assumes the cost of any car repair.
Insurers differentiate between damage caused by an accident and what is a vehicle breakdown . Therefore, if an insured car has a steering failure or engine failure, the Insurance would not cover that repair.
But, if that steering fault causes an accident that causes damage to the vehicle, things change. This would be covered by the Own Damage guarantee and the insurer would assume the repair of the car or compensation for total loss, if the case arises.
Own Damage does not cover what is already covered by other guarantees
We have previously mentioned the damage to the vehicle caused by meteorological phenomena that is covered by the Insurance Compensation Consortium and is not covered by Personal Damage. But it is not the only circumstance that is among the exclusions of this guarantee because it is already covered by another coverage of the policy.
For example, if the car is stolen and the thief breaks the window to take the radio, destroying the dashboard. In this case, there is damage to the vehicle itself and it is not known who is the guilty third party, the thief, to be responsible for these damages.
However, the repair of the damage will not be covered by the Own Damage coverage, because the Theft guarantee takes care of the damage caused by theft or attempted theft. The same happens if there is a fire in the car or the windows break by accident.
Car accessories and Personal Damage
One of the things that we must review before signing an All Risk Insurance is the chapter that the contract dedicates to the coverage of car accessories in the Own Damage guarantee, since there are important differences between some insurers and others.
Stock accessories are not always covered in the same way. Normally, if a car accessory is destroyed after an accident and cannot be repaired, the insurer will exchange them for new ones.
The exception is tires , since many insurers only cover tires when the damage is the result of an accident with another identified vehicle, and do not cover them if they are the only damage to the vehicle.
Others only cover a part and compensate the loss with a percentage of the new value, and only some companies compensate wheel damage with the new value, that is, by mounting a brand new rim and tire on the damaged car. In this post about wheel and tire coverage you can find more information on the subject.
Accessories in tuning cars
Lovers of tuned cars should be very attentive to the issue of accessories. If you change the tires for more attractive ones or incorporate spoilers or any other decorative element and you have All Risk Insurance, you should know that, if you do not negotiate it with the help of your Insurance broker, the insurer will only include in the All Risk coverage the original car parts.
Accessories that are not standard
As in tuned cars, any car can have accessories that are not standard . That is, they are not part of the vehicle’s standard equipment or have been installed after the date of purchase.
In order for the policy to cover compensation for these accessories in the event of an accident, in addition to having contracted Own Damage coverage, each of them must be detailed in the Particular Conditions of the contract, including the value of the insured accessory.
Why is the Own Damage guarantee so expensive?
All Risk Insurance are usually the most complete policies and, also, the most expensive. This is so for three fundamental reasons:
- Own Damage covers a wide range of risks, which affects the price of the Insurance.
- In many cases, the compensation for the elements of the car or for total loss is calculated on the new value.
- Own Damage is the guarantee that has a higher loss frequency ratio among Car Insurance. In other words, the number of claims on insured vehicles is very high. In the case of Own Damage Insurance, it is usually above 35%, much more than the rest of the guarantees that are below 10%.