What is Return to Invoice Cover in Car Insurance – RTI

What is Return to Invoice Cover

Comprehensive insurance policy safeguards you from the third-party liabilities and own damage or theft of the car. But this policy is not sufficient if your car gets damaged totally or stolen by someone.

If you have the basic comprehensive policy then you get your claim according to insured declared value (IDV).

Insurance companies offer some add on to enhance the value of comprehensive insurance policy. Return to Invoice is also one of the important add on cover for Car insurance. Especially for those people who are buying a new vehicle or having a 1 or 2 years old car.

Return to Invoice cover is basically fulfill the gap between the purchase price and insured declared value (IDV). By adding this cover, you increase the coverage in the policy and you get the entire claim amount in case of theft or Total Loss.

What is Return to Invoice (RTI)?

RTI is add on cover which you can add in your comprehensive policy by paying an additional premium. Your regular policy doesn’t cover the value beyond the insured declared value.

By adding this cover, you get the complete reimbursement of your car purchase price or you can say if your car is stolen or damaged beyond repair (more than 75%) then you get the entire invoice price of your car.

In case of RTI companies pay you claim in following ways:

Invoice value of vehicle (Ex-Showroom Price + the Road Tax + Registration Charge)

Or

The Vehicle Replacement Value (Ex-Showroom + the Road Tax + Registration Charge)

or

Ex-Showroom Price + Additional percentage

Normally, registration charges are given according to the initial original purchase bill. There are some companies which provide you vehicle replacement value.

Premium for RTI

Do you need to pay any additional amount for RTI cover? The answer is yes. This is an additional which you can add in comprehensive policy by paying extra premium.

It cost you approximately 10% more than the basic premium. It may vary from company to company. Assume three segments of the car.

Basic PremiumPremium with RTI
Rs. 10000Rs. 11000
Rs. 15000Rs. 16500
Rs. 20000Rs. 22000

What is Importance of Return to Invoice?

With the help of the below example, you can understand the importance of Return to Invoice Cover. Suppose Mr. Srivastava purchase two cars on the same date with the same purchase price.

He purchased a comprehensive policy for one car and for another vehicle he took a Comprehensive policy with RTI. Let see what will be the difference of claim if his car gets stolen or Total constructive Loss.

Normal Comprehensive PolicyComprehensive Policy with RTI
New Car Purchase Price = Rs. 40 LacNew Car Purchase Price = Rs. 40 lac
Two years later, IDV = Rs. 28 lac
(Depreciation at 30%)
After two years, IDV = 28 Lac
(Depreciation at 30%)
Car Stolen or Total Constructive LossCar stolen or total constructive Loss
In This case, the claim will be paid according to IDVIn this case, the claim will be paid according to purchase price

As you see above that normal comprehensive policy not provide complete reimbursement of the car and claim paid as per current IDV.

However, in case of having add on of RTI Mr. Srivastava gets the full claim amount and that is the purchase price.

Who Should Buy Return to Invoice?

This is a very important add on cover and ideally everyone should take this. However, it is not available after a certain vintage of the vehicle. This is highly advisable to those who purchase a new car.

Following are some situations where RTI should be taken:

  1. Luxury and Expensive car owner
  2. New Car
  3. If residing in risk-prone area
  4. Don’t have proper parking and park the car randomly
  5. Inexperience driver or New driver
  6. Who travel long distance on a regular basis
  7. If you have a high use of your car

In the above case the chance of risk is high that’s why RTI is recommended. For example, the car driver is very new and inexperienced then the chance of damage to the car may be high.

If you have a luxury car then the loss amount will be high and it will be a high financial loss if your car is stolen or gets total damage.

If you are residing in the area where the risk of theft or damage is high then also it can be very useful add on. In the same way if proper parking not available and you park your car randomly then the chance of theft will increase. Highly risk situations opting for RTI may be very useful cover.

Does RTI Applicable for Partial Loss?

This is a very important point which you should be clear about. Return to Invoice cover is not applicable in case of small damage or partial loss. If your car gets damaged partially or small dent etc then your claim will be processed according to IDV.

If you have opted zero depreciation add on then depreciation factor will not be countable. It is advisable to take zero depreciation add on if your vehicle is less than 5-year-old.

Return to Invoice vs Zero Depreciation

Let’s understand that what is the difference between Zero depreciation policy and return to Invoice. Zero depreciation policy pays you the claimed maximum up to the IDV without any depreciation. However RTI covers the road tax and registration charges also.

RTI is basically a bridge between Insured declared Value and Invoice Value of the car. Let’s see this table:

Policy with Zero DepreciationPolicy with Return to Invoice
Applicable in Partial Loss, Total Loss, Total Constructive LossApplicable only in case of Total Loss and Total Constructive Loss
Claim = According to IDV without depreciation factorsClaim = Invoice Value including the Road tax and Registration Charges

In case of a claim in RTI add on, some insurance companies may also pay the premium of comprehensive insurance policy for the new vehicle.

What is the Car Age Criteria to Get RTI?

RTI is available only to the specific age limit of the car. You cannot purchase this add on cover for any age of vehicle. Most companies offer return to Invoice cover up to the three years old car only.

Some also offer up to 5 years. After that this option not available because after this age of the car there is significant wear and tear in the vehicle. The company may face losses if they will provide above the specific age limit.

Popular Companies for RTI

Below are some popular companies which providing Return to Invoice cover:

ICICI Lombard

Tata AIG

Bajaj Allianz

HDFC Ergo

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