Make the Most of Your Car Insurance with a Return to Invoice Add-On

Posted on: Jul 21, 2020 | | Written by:

Make the Most of Your Car Insurance with a Return to Invoice Add-On

Published on July 13, 2020. EST READ TIME: 3 minutes

Return to Invoice Cover in Car Insurance

We are all aware of what car insurance is, the coverage it provides, its benefits, and other exclusions. Car insurance financially protects you in an unfortunate event involving the insured vehicle. But car insurance or third party car insurance can be more than financial protection. If you choose suitable add-ons and certain things while buying insurance, it can be of great advantage. One such add-on is the Return to Invoice Cover Add-on. Insurance companies offer RTI as a part of the comprehensive car insurance plan. Let's check more details about this add on and how it can benefit car owners.

What is Return to Invoice Add-On?

Return to invoice, also called RTI, is an additional coverage option that provides compensation equal to the original purchase price of your vehicle. In case of a total loss due to theft or extensive damage, this coverage ensures that you receive the full amount you paid for your car when you bought it. The decision to include Return To Invoice Cover in your car insurance policy is entirely up to the owner and is not legally required.

How Does Return to Invoice Add-On Work?

If you have a basic car insurance policy, it's important to note that it may not reimburse you for the actual value of your car or the amount you initially invested when purchasing it. Insurance companies often factor in depreciation when settling claims. For example, they may apply a 5% depreciation rate for cars that are six months old from the date of purchase and a 10% depreciation rate for cars that are one year old.

If such a situation arises, you could potentially suffer a significant financial loss. However, with a return to invoice cover in place, you wouldn't bear the burden of this loss. Instead, the insurance company would compensate you for the car's full value until it reaches three years. Hence, you get total loss protection with a return to invoice add-on.

The add-on cover is only available for new cars and has a validity period of three years from the date of purchase. The return on invoice option is not applicable after three years since older cars tend to wear and tear significantly.

Return to Invoice Add-On Offers Multiple Benefits

The return to invoice cover in car insurance has several benefits for car owners. Some of them are as follows:

1. Available for new cars

If your new car happens to be damaged, it can cause a lot of stress - mentally and financially. That's where the Return to Invoice (RTI) add-on comes in handy. It is specifically available for brand-new cars and remains valid for three years from the purchase date. With RTI coverage, you can drive around without worrying about unexpected costs and enjoy peace of mind.

2. Beneficial In Case of Theft

Car theft is a prevalent issue in India. Hence, it's important to be aware that individuals with malicious intentions can steal your vehicle. Hence, having a return to invoice in car insurance is crucial to protect the significant investment you made in purchasing a brand-new car. Without it, the money you invest in buying a car would be lost.

3. Beneficial In The Event of Total Loss

Total loss refers to an event where the car damage is to such an extent that the repairing cost of the car is more than the resale value of the car. In such cases, return to invoice can be extremely beneficial. It will help you get the car's worth without concern about damage, restorations, or salvage.

When is RTI Applicable?

Please note that RTI (Return to Invoice) insurance is not applicable for minor accidents or repairs. It only applies in cases of a total loss, such as theft, natural calamities, or severe accidents where the vehicle sustains significant damage and becomes unusable.

There could be several reasons that could cause a car to be a total loss. Here are a few:

• Fire

• Floods

• Landslide

• Accident

It's important to note that if you don't have this cover, you would only be liable for the IDV (Insured Declared Value) of the car in case of a total loss or theft.

RTI - Cost and Calculation

Return to Invoice is an additional coverage option to add to your car insurance policy. Yet, you need to pay an extra 10% premium.

Now, for the calculation of the RTI, it is relatively easy. It's usually equal to the invoice value of your car. For example, if your car is valued at Rs. 10 Lakhs, the insured value with Return to Invoice would be approximately the same amount.

Factors to Consider Before Opting for a Return to Invoice Add-On

When considering opting for a return to invoice cover add-on, here are a few things to keep in mind:

• Adding the RTI cover to your car insurance policy will result in an increase in your overall premium rate.

• This cover only applies to new cars that are not over three years old.

• The cover will provide financial security against total loss because of complete theft or damage.

• Make sure you're familiar with the claim process for the Return to Invoice policy. It's essential to understand what documentation is required and the steps you need to take in case you need to make a claim. Having a smooth and transparent claim process is crucial.

• When selecting an insurance provider, it is essential to choose one that has a reputation for promptly processing claims and providing exceptional customer service.

• If you're unsure whether to choose the add-on, it's advisable to seek guidance from a financial advisor or insurance expert.

Conclusion

So here is everything you need to know about the return to invoice cover. We know uncertainties can hit us anywhere, anytime, and it can be emotionally and financially straining if anything goes wrong with your brand-new car. Hence, the RTI cover add-on can be an excellent option that gives you peace of mind and lets you travel freely with your new vehicle.

This blog has been written by

S. Gopalakrishnan | Motor Insurance Expert | 40+ years of experience in insurance industry

A veteran in insurance industry. S. Gopalakrishnan is a name to reckon with in the field of reinsurance, he has headed the Reinsurance department and has rich experience in other fields of motor insurance. He loves to share his opinion on latest topics in the insurance industry and how he can help people in safeguarding their assets using insurance products.

Mr.S. Gopalakrishnan recommends "HDFC ERGO for your vehicle insurance needs, it has always put customer’s interest at the forefront, with round the clock assistance to deal with emergency breakdown issues and hassle free claims process. You can be assured of complete and reliable guidance through the whole process."

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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