Return To Invoice Cover In Brief
Purchasing a car is a significant investment and an important decision of an individual’s life, so it is necessary to protect your car with a good insurance policy. There are various types of insurance policies available from which you can choose the one which suits your requirements best. Some of the most popular insurance policies are:
Third party insurance policy:
It is mandatory for every vehicle owner in India to insure his vehicle with a third party insurance cover. This policy rescues you at the time of the accident, and it covers any liability against a third party in terms of death, bodily injury and property damage.
Comprehensive insurance policy:
It safeguards you against:
Damage to the car
Legal liability to the third party
Usually, people opt for comprehensive insurance policy but there are different add-ons which can offer you effective cover from total loss. Return to Invoice (RTI) is one such effective add-on which offers a greater degree of protection to your car.
What is Return to Invoice?
There is a problem with conventional comprehensive insurance policy; it does not cover all aspects such as depreciation. In case of a total loss, if you have a comprehensive insurance policy, you only get Insured Declared Value (IDV). Return to Invoice is an add-on option which covers the gap between the insured declared value and the invoice value of your car along with the registration and other applicable taxes. RTI helps you in fetching purchase value (on road price) of the car in case of theft or total loss.
When is it applicable?
RTI is only applicable if your car is damaged extremely and becomes unusable. For small damages, RTI is not applicable. When the cost of repair of the vehicle is over 75% of the IDV, it is considered as total loss. If you are worried about partial loss then zero depreciation cover can take care of such losses. RTI also comes into force in case of theft of the vehicle. In short, Return to Invoice is not an option for you to compensate for small dents and repairs.
RTI is a better option for you if you are living is an area where car theft is extremely common, or you do not have secure parking, or you travel for long distance almost daily and chances of meeting with an accident are high. In case of any mishaps, with a normal insurance policy, you will only get the value which was declared in the policy (after depreciation).But with RTI, you will receive the on road price of your car. Depreciation is applied at 5% for the first six months from the day of purchase and 10% for each year, which means you can lose a lot if you do not have RTI. RTI helps you in bridging the gap of on road price of your car and IDV which you declared at the time of buying the policy.
Cost of RTI
Return to Invoice costs you around 10% more than your normal comprehensive policy. The policy is only available until your car reaches a specified age. If your car is over three years of age then RTI is not applicable. Usually, insurance companies withdraw the RTI option once your car reaches a certain age.
If you have decided to buy a new car, you must consider Return to Invoice option which will protect you financially in case of severe accidents or theft.
The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.