Return to Invoice Cover (RTI) in Car Insurance

You must be aware that when you buy a car, its value starts depreciating as soon as you take it out of the showroom. The percentage of this depreciation may seem small at the beginning, but it increases each subsequent year.

This is a crucial aspect when it comes to the insurance of your car. The insurer will cover your vehicle according to its IDV (Insured Declared Value), i.e., the current market value of the car. So, even if your car is stolen or damaged beyond repair, you will be compensated with the depreciated amount and not the price you bought it for originally.

For instance, Aman bought a brand new Honda City for Rs 14 lakhs. The value of the car began depreciating the moment he took it out of the showroom. The car was stolen within the first year of the purchase. Let’s assume it gets depreciated by 15% within the first year.

So, the depreciation amount = 15% of 14 lakhs = Rs.2,10,000

The compensation he is eligible to get from the insurer

=Rs.14,00,000 - Rs.2,10,000

=Rs.11,90,000

So Aman will receive Rs. 11,90,000 from the insurer. And, if Aman plans on buying a new car of the same model, you will have to bear the price difference!

However, there is a workaround for this unfortunate situation. Car insurance plans can be customised with an add-on called Return to Invoice Cover.

So, what is a Return to Invoice Cover? What are its benefits? How do you calculate it?

Let’s have a look!
 

What is Return to Invoice Cover in Car Insurance?

A Return to Invoice (RTI) cover is essentially an add-on that allows you to get the invoice amount of the car, i.e., its original amount in case of any total loss, constructive total loss, or theft of the car - without factoring in the depreciation. Here are some features of the RTI Cover-

It is an add-on available with comprehensive insurance plans , and you are required to pay an additional premium if you want to add it to your policy.

It can be purchased by new car owners. It is available for vehicles that are less than 3-5 years old.
 

How does Return to Invoice Cover Work?

The Return to Invoice cover gets triggered when your vehicle meets with an accident and the damages are beyond repair, or if your vehicle is stolen. In such scenarios, you can claim under the cover.

For example, if your vehicle is stolen and you have an RTI cover added to your policy, you can raise a claim and get the invoice value of your vehicle.

Note: You will be eligible to claim the invoice amount only if you have the Return to Invoice cover added to the policy. If you don’t and in case of total loss or theft of your vehicle, you only get the Insured Declared Value of the vehicle.
 

Why Should You Buy a Return to Invoice Cover?

If you own a comprehensive insurance plan, and your car gets stolen or damaged beyond repair, the insurer will compensate you with the IDV. An RTI Cover helps you negate this by cancelling out the depreciation, thereby making you eligible to receive the invoice amount for the car.

You should consider adding a Return to Invoice Cover in your insurance plan if-

• You live in an area which is prone to thefts or you feel insecure.
• You own a luxury vehicle that is priced on the higher side.
• You live in a hilly area, or an area where floods or accidents occur often.
   

Benefits Of Return To Invoice

Here are the numerous benefits of Return To Invoice cover in car insurance -

1. Extended Protection Beyond Standard Insurance
   RTI in car insurance works as an additional layer to your comprehensive policy, offering extended coverage. By including this add-on, you significantly boost your financial security, helping to cover major losses that otherwise might not be fully protected under your standard policy.
    
2. Perfect Shield For New Car Owners
   If you’ve recently purchased a new vehicle, RTI can be incredibly valuable. In the case of an accident or severe damage, this coverage guarantees that you won’t face financial loss on your investment.
    
3. Comprehensive Coverage In Total Loss Scenarios
   If your car is deemed a total loss, meaning the repair costs surpass 75% of its insured value, RTI steps in to cover the entire invoice amount of the car. This means you won’t have to worry about bearing a large financial burden and can easily replace your vehicle without losing out on your original investment.
    
4. Safeguard Your Savings With RTI
   RTI coverage ensures you won't have to drain your savings to buy a new vehicle after a total loss, offering incredible peace of mind during tough times.
    
5. Hassle-Free Claims For Full Invoice Value
   RTI coverage takes the hassle out of the claims process, offering clarity and assurance that you’ll be reimbursed for the full price you initially paid for your vehicle rather than dealing with the lower, depreciated market value.

Curious how RTI in car insurance steps up? Dive into when this coverage kicks in to save the day after a major mishap!
 

When Is The Return To Invoice Cover Applicable?

RTI or return to invoice cover in car insurance is tailored for specific scenarios and isn't meant for everyday repairs or minor damages. Here's when it really comes into play-

• When Total Loss Becomes A Reality
  RTI coverage proves invaluable when your car is deemed a total loss—meaning repair costs exceed 75% of the vehicle’s insured value. In such scenarios, you’ll receive compensation equivalent to the full purchase price of your car rather than its depreciated market value.
   
• Protection Against Vehicle Theft
  If your vehicle is stolen and not recovered, RTI coverage provides you with the original purchase price so you can replace your car without worrying about financial loss.
   
• Recover From Major Accident Damages
  If your car is severely damaged in an accident and deemed a total loss, RTI coverage will reimburse you based on the original purchase price, allowing you to fully recover your investment.
   
• Ideal Coverage For Brand New Cars
  RTI coverage is a game-changer for those who’ve just bought a new car. If your new vehicle is declared a total loss, it helps you reclaim your full investment, making the replacement process smoother and more financially manageable.
   

When Is The RTI Cover Not Applicable?

RTI or return to invoice cover is not applicable in the following circumstances -

1. Minor Repairs: RTI coverage is designed for total loss scenarios and does not apply if your vehicle is damaged but is still repairable. This coverage is intended specifically for situations where the vehicle cannot be salvaged.
2. Lack Of Proper Documentation For Theft: RTI coverage requires a police complaint or FIR to process a claim for a stolen vehicle. Without proper documentation, your RTI claim cannot be honoured. Ensure you have the necessary paperwork to validate your claim.
    

How Much Does Return To Invoice Cost?

Thinking about adding RTI or return to invoice cover to your comprehensive car insurance?

Remember that RTI in car insurance is an optional upgrade you can add to your comprehensive car insurance policy. This enhancement boosts your policy’s protection, but it also comes with an increase in your premium.

Typically, you’ll see your premium increase by about 10% when you choose RTI. While this extra cost might seem like a small bump, it’s a modest investment compared to the substantial sum insured that RTI guarantees. Imagine having the reassurance that if your car is totalled or stolen, you'll be reimbursed for the full original purchase price, not just its depreciated value. For many, this added layer of financial security is worth the relatively minor premium increase.
 

Validity Of The Invoice Protection Cover

When you add Invoice Protection Cover to your car insurance, it’s usually valid for a year—just like the rest of your policy. After this period, you'll need to renew your entire car insurance policy to keep enjoying the added benefits.

Remember, insurers might adjust the validity period now and then, so it's a good idea to check your policy documents for the most accurate details on when your coverage expires and when you should renew. Keeping an eye on these dates ensures you’re always covered without any unexpected gaps.

Curious about who really needs RTI coverage? Uncover the key players who’ll find this protection indispensable and why it’s worth every penny!
 

Who Should Opt For A Return To Invoice Protection Cover?

• Perfect For New Car Owners: RTI coverage is tailored especially for new vehicles.
• Ideal For High Theft-Risk Areas: RTI offers financial protection in the event of theft, safeguarding your investment.
• Best For People Living In Disaster-Prone Areas: RTI covers total loss caused by natural calamities, ensuring your investment is protected.
   

Which Of The Add-On Covers Is Better? Zero Depreciation Or RTI?

Both zero depreciation and return to invoice (RTI) add-ons enhance your car insurance, but each serves a distinct purpose.

Here's a breakdown of how they compare-

Return to Invoice Cover Calculation

When you buy a new car, you pay the ‘on-road price’ of the vehicle. This also includes the showroom price of the vehicle, along with registration charges, insurance charges, and road tax charges.

Let’s see what happens if you own a comprehensive insurance plan without an RTI cover and with an RTI cover.

• Comprehensive Insurance Plan Without RTI Cover
  If your car is stolen or damaged beyond repair, the compensation will be determined by the IDV.
   
• Comprehensive Insurance Plan With RTI Cover
  If your vehicle is damaged beyond repair or stolen, the compensation will be equal to the original value of the car, which depends on the following two values-
  Vehicle Price= Ex-Showroom Price + Road Tax + Registration Charges (at the time of the original purchase).
  Current Replacement Price of the vehicle= Ex-Showroom Price + Road Tax + the Registration Charges (in case the same model is available).

Let’s take Aman’s example again. If he had added the RTI Cover to his car insurance policy, he would be eligible to receive the invoice value of the car as the compensation from the insurer. This means that he would receive Rs 14 lakhs as the compensation.
 

Are There any Exclusions to the Return to Invoice Cover?

The RTI Cover will not be applicable in the following cases-

• Third Party Liability
  In case your vehicle causes any sort of damage to a third person or their property, you cannot claim under the RTI Cover as it covers only own damages.
   
• Old Vehicles
  As mentioned before, the RTI Cover can be purchased for vehicles that are less than 3-5 years old. You will not be given the RTI add-on option after a certain number of policy renewals.
   
• Non-Filing Of FIR
  If your vehicle has been stolen and damaged, it is necessary to file an FIR at the nearest police station and also submit a copy of the FIR to the insurer. Not complying with these steps will make you ineligible to make a claim under the RTI Cover.
   
• Minor Damages
  If your vehicle has sustained minor damages and can be repaired, you cannot claim under the RTI Cover.
   

Important Points to Note About Return to Invoice Cover

Here are a few things you should keep in mind about the RTI cover -

It is available only for those vehicles less than 3 years old. You won’t be able to add it to vehicles more than 3-5 years old.

You won’t be able to make a claim under the cover for minor damages or repairs.

It is an additional cover, which means you will have to make an extra payment to get it added to your policy.

So, we hope this article helped you understand what a Return to Invoice Cover is. This add-on is especially beneficial if you own an expensive car or live in a locality that is relatively unsafe - so you are protected from any heavy financial losses and stress.
 

Frequently Asked Questions