Thanks to easy loan options offered by banks and NBFCs, it is pretty simple to own a car today. However, that does not make it any less a financial commitment. Therefore, it is important to protect it at all times. One way of doing it is by buying car insurance. Car insurance will financially safeguard you in the face of a mishap involving your insured car.
Although the law mandates third-party coverage for all car owners, investing in a comprehensive insurance policy that provides complete protection for your cars is preferable. The wider the insurance coverage for your car, the smaller will be the burden of out-of-pocket expenses on you. The Return to Invoice (RTI) coverage add-on is one such advantageous insurance policy. You can also opt for the RTI cover at the time of car insurance renewal online .
What is Return to Invoice (RTI)?
Return to Invoice Generator is a protection feature with comprehensive insurance coverage for cars. The add-on entitles you to get payment equivalent to the invoice value of the car or the initial price you paid for the car. The car is covered under the claim if it is stolen or damaged beyond repair. For instance, it may place you in a tough position if your car were to be stolen and the authorities were unable to locate it. When that happens, the Return to Invoice cover saves the day.
Essentially, the add-on option bridges the difference between your car’s insured reported value and invoice value. If you have RTI coverage in your insurance and your automobile is lost, stolen, or irreparably destroyed, you may get the car’s total purchase price as compensation from the insurer. However, for that you must buy RTI coverage at the time of first-time policy purchase or during car insurance renewal online.
RTI in Car Insurance
1. Cost and validity
You may have to pay around 10% more for RTI protection than a typical comprehensive car insurance policy. The add-on cover is available only with new cars and is suitable for three years from buying the automobile. After three years, the RTI option is no longer available as cars older than that usually show considerable wear and tear. Insurance companies cannot overlook filed RTI claims since doing so would result in a loss for the insurer. The car insurance renewal online must be done simultaneously with the complete premium renewal each year.
2. Complete reimbursement vs. IDV
When you choose not to use RTI coverage, the insurer will only refund you the amount specified in your policy, which is the Insured Declared Value or IDV. It accounts for yearly depreciation. It would help if you considered that during the first six months after the date of purchase, a vehicle’s value starts to decline by 5%. The car’s worth depreciates by 10% in a year, and the proportion keeps increasing each year. If anything happens to your automobile during this period, you would face a significant loss since the car’s value would have declined. However, if you have bought RTI car insurance, you may get a full refund of the money you spent on the car’s purchase, irrespective of its declining value.
3. RTI safeguards your vehicle against theft
If you have RTI coverage, you will get your money back in full if your car gets stolen during the first three years after purchase. People who do not have a secured parking place for their cars or live in neighbourhoods where theft is common must get RTI coverage. It will help you recover the total worth of your car if it gets stolen.
4. RTI guards your car against harm brought on by accidents
If your car insurance plan includes the return to invoice add-on, you will be qualified for full reimbursement of the actual cost of the car if an accident results in damage beyond repair. Therefore, you may get your entire investment including the car’s on-road price if there is irreparable damage to the vehicle during the first three years.
5. Enables you to drive peacefully
Knowing that your automobile is insured allows you to travel worry-free. You do not have to be concerned about any damage to your car or hefty repair bills.
Calculation of RTI in Car Insurance
You must pay the “On-Road Price” when purchasing a new car. This cost will also include the road tax and the ex-showroom price. To top it all, there are registration fees based on the class and brand of the automobile. When your car is totalled after all the payments, the amount you get back is lower than what you originally paid depending on your IDV. This explains why your IDV under the RTI cover equals the “On-Road” cost. In other words, you are compensated with the purchase price you paid when your automobile gets stolen or irreparably destroyed.
However, the insurance provider often pays the lower of the following two amounts when you submit a claim under total loss or total theft:
- The cost at the time of the purchase along with the road tax, registration amount, and ex-showroom cost.
- If the same model is still available in the market, the present replacement cost of the car includes the road tax, registration fees, and ex-showroom price.
Applicability of the Return to Invoice Cover
The Return to Invoice cover may be applied to vehicles between three and five years old, depending on the insurance provider. You can claim against this coverage only in the event of a complete loss of the covered vehicle. You may have to provide the car’s original invoice when filing a claim.
Non-applicability of the Return to Invoice Cover
The Return to Invoice coverage is not applicable in the following circumstances:
- If your car is of an older model. In this situation, you will not be given the option to choose RTI insurance. You cannot buy the RTI add-on after a set number of car insurance renewals online or offline. The contents of the insurance contract determine this duration.
- It will not be applicable if your car has been damaged, but only to the point where repairs are still possible. This is because RTI insurance is applicable if the damage to your vehicle is severe or if it gets stolen.
- If you assert that your car was stolen but do not have an FIR or police report to support your claim. Do not be worried because if your vehicle gets stolen, RTI insurance will be applicable. You must, however, include pertinent evidence to support your position.
Conclusion
Return to Invoice is essential in preventing you from paying a significant depreciated sum. Instead, you receive the entire car’s worth, and sometimes much more. The RTI cover is an additional cover that comes at an extra premium. You may buy it along with a brand-new car. You can opt for it at the time of car insurance renewal online within three years of car purchase. The RTI add-on covers only complete loss and theft, while other automotive damages are not covered. The Return to Invoice policy is quite helpful in recovering the cost of your car in the event of total loss.
Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.