What happens when you become a victim of theft and the cops, despite all efforts, cannot locate your vehicle? It is also known that cars, in some unfortunate cases, get totalled. In such a scenario, would it not be better to have an option that indemnifies your loss to the full extent of the price you had invested in it? The good news is there is such an option. It is called the Return to Invoice cover, which is available as an add-on to your insurance premium.
What is Return to Invoice Cover in Car Insurance?
Return to Invoice cover, or RTI, is a term used for an add-on cover offered by insurance companies to car owners. This add-on cover is provided as a part of comprehensive car insurance to secure the automobile. So, what is the meaning of Return to Invoice cover? How is it different from the conventional insurance we get for our cars?
First, RTI cover in car insurance is only available as an add-on for new cars. The difference between RTI insurance cover and regular car insurance is in the value at which your car is insured. If your car is wrecked or stolen, the conventional cover will give you the depreciated value of your car at the time of the incident or the loss accruing out of it. This amount is significantly lower than the actual invoice amount of the car. If you have a Return to Invoice cover in car insurance, then you can claim the full amount you paid at the time of the car’s purchase. Put simply, it means you can replace the same car model in the event of a mishap or loss without having to spend extra from your pocket! Let us now understand how the two insurances work.
What Does Regular Insurance Offer as Compensation?
When you go for a conventional insurance cover for your car, it indemnifies you to the extent of the depreciated value of your car after it has rolled out of the showroom. Depreciation is an accounting practice that estimates the used value of your car, which is systematically deducted annually from the original invoice amount. It also helps in putting a market value to your car.
For instance, you may have purchased your car for ₹8,00,000 in April 2020, and you paid a premium based on this valuation. In 2022, let’s say your car has been valued at ₹5,50,000. This is listed as the Insured Declared Value (IDV) of your car. The drop in the value of your car is because of the depreciation in the books of the insurer. In regular insurance, you can claim an amount that does not exceed the Insured Declared Value of your car. In this case, you can receive a maximum compensation of ₹5,50,000 in the event your car is totalled or stolen.
Also Read: Engine Protection Cover
How Does RTI Work?
This is where an RTI cover in car insurance comes to your rescue. Consider Return to Invoice Cover like an add-on portion of a combo meal. For instance, you pay a basic amount for a burger. But when you go for a meal, which includes fries and coke, you pay a top-up amount over and above the price of the burger. The burger, in this case, is regular insurance. The meal is the comprehensive insurance cover (See chart), with add-ons such as engine insurance cover and Return to Invoice cover.
The return to invoice cover in car insurance bridges the difference between your automobile’s IDV and the original price (as per the invoice). This insurance is called Return to Invoice cover because it secures your car to the full extent of the amount you had invested in it. In the aforementioned example, in case of an unfortunate incident of your car becoming irreparable or stolen, you will benefit greatly from the Return to Invoice cover, meaning you would be entitled to maximum compensation of ₹8,00,000. This is the amount you paid for the car as its invoice value instead of its IDV, which is on the lower side.
Also Read: Car Insurance with Zero Depreciation
When is Return to Invoice Cover Applicable?
- You cannot claim compensation for normal wear and tear, or damage that can be mended under Return to Invoice cover. Claims under RTI are only admissible when the loss of your car is irreversible. For repairable damages, regular insurance cover will be applicable.
- You can claim Return to Invoice cover if you suffer financial losses due to theft or irreparable damages. This means you have suffered the complete loss of your vehicle. Only owners of a new car can choose RTI insurance cover.
How to Calculate RTI?
- Under Return to Invoice cover, you are entitled to receive compensation that equals the car’s original invoice value at the time of purchase. This insured amount remains the same.
- If the same model is available, the company offering Return to Invoice cover will pay the lower between the purchase price and the current price of your car. They will compare the following two:
- Original purchase price: ex-showroom price + road tax + registration charges.
- Current replacement price: ex-showroom price + road tax + registration charges of the same model.
- You may need the original invoice of your car to raise a claim for Return to Invoice cover.
What is Covered/Not Covered in Return to Invoice (RTI)?
We can consider return to invoice as a tool which gets rotten with each passing year.
- Return to invoice works well for new vehicles, as it helps protect the case of the vehicle if it gets damaged beyond repair or stolen.
- If your society is prone to thefts, return to the invoice should be taken advantage of, as the motor insurance plan will provide complete protection.
- Usually, while claiming motor insurance, the compensated amount also accounts for the vehicle’s depreciation. Whereas, if you have chosen an RTI insurance plan, depreciation will not be accounted for, and the return will be based in the last invoice value of the vehicle.
Now let’s find out where Return to Invoice Cover is not applicable-
- If the vehicle is damaged but it can be repaired, you will not be able to claim RTI. Since, RTI can only be benefited from a damaged vehicle where the damage is beyond repair or it’s stolen.
- If the vehicle is old, RTI insurance will not be offered.
- If your vehicle is stolen, and you don’t have relevant documents to prove it (FIR/police complaint). Then you will not be able to claim RTI.
How to Claim Against RTI Insurance Cover?
There are various ways you can opt to get claim against RTI insurance cover, some of which are-
- A stamped copy of the FIR will be required in case of theft. The FIR should state that the car is untraceable.
- In case of damage beyond repair, get a feedback from an authorized garage.
- You can submit these documents online on the platform you received the RTI Insurance from.
Advantages of RTI Insurance Cover
Here is a list of advantages that come with RTI Insurance-
- Best for new cars
- Coverage scope increases
- In case of total damage, great protection is provided
- Beneficial in case of car theft
- In case of damage beyond repair, you get a similar model of the vehicle
From the aforesaid discussion, we can safely conclude that:
- If you are buying a new car, Return to Invoice cover is a worthy add-on as it buys you peace of mind. RTI insurance cover ensures that you get the original invoice value of your car instead of the depreciated IDV in the event its loss is irreversible.
- You cannot forego basic or regular insurance while opting for car insurance return to invoice cover. It is an add-on feature.
- While most insurance companies offer RTI insurance cover at the time of buying a new car, some insurers allow you to get this add-on within the first 3 years of purchasing the car.
When you are buying a new car, it is better to go for Return to Invoice cover. RTI is an add-on subscription that secures your car against irreversible damage to a car in an accident or a natural calamity or when your car is untraceable after a theft. Return to Invoice cover in car insurance compensates you the invoice value of the car at the time of its purchase. In regular insurance, you would only get the IDV or the depreciated value of the car at the time of the incident. Return to Invoice cover, however, cannot be availed on cars more than 5 years old. Even when you have RTI insurance cover, you cannot avail of its benefits for reparable damages. But, it brings you peace of mind, which is unparalleled.
Also Read: Car Insurance Renewal
Frequently Asked Questions
A regular cover for your car is non-negotiable. You will have to get one for your vehicle. RTI cover in car insurance is an add-on facility and not a stand-alone option.
Car owners who live in disaster-prone areas or localities with a high incidence of thefts should opt for RTI insurance cover.
No, it is not. While Return to Invoice add-on compensates the original invoice value of your car in the event it is totalled beyond repair or stolen, in zero depreciation cover, partial damages are also covered.
An RTI cover in car insurance is applicable for a maximum period of 5 years.
On average, you have to pay an extra 10 per cent of the premium for regular insurance when opting for Return to Invoice cover as an add-on.
RTI insurance can be availed within the first 3 years after buying a new car.
Ideally, people with brand new cars, or cars less than 5 years old.
RTI cover is needed for new cars that do not need much maintenance. Whereas zero depreciation cover is useful when the vehicle requires lots of repairs. Depending on your needs, car insurance should be chosen.