Return To Invoice Cover in Car Insurance

People are familiar with what is car insurance, its benefits, or even coverages and exclusions for that matter. Car insurance will financially protect you in case of an unfortunate incident involving the insured vehicle.

However, a car insurance policy is not just about financial protection when a liability occurs, it can prove to be of great help if you ensure certain things while buying the policy. One such beneficial coverage is the Return to Invoice Protection Cover Add-on. In this article, we will discuss various aspects of this additional coverage.

Wondering what is Return To Invoice meaning in car insurance? It means that the insurance company will return the value of the car approximately equal to the one mentioned on the original invoice of a car in case of a major damage. RTI in car insurance is additional coverage that an owner can purchase while new car insurance policy. The decision to include Return To Invoice Cover in car insurance lies with the owner of a car and is not mandatory by law.

RTI in car insurance can be beneficial in various ways. It can prove to be a great financial help in the time of need and one does not have to endanger their savings for buying a car.

Here is a list of advantages of RTI in a car insurance policy:

1. Increases The Scope of Coverage: Return to Invoice is an Add-on, that means it is an additional coverage that you will buy with your car insurance policy. Add-ons increase the scope of coverage and make it customized. Since it is not free coverage, not everyone chooses to buy this cover.

2. Is Available For New Cars: Some people take extra care of their new car as compared to an old one. Thus, it is also true that it is more emotionally draining if a new car gets into an accident of any sort and damage is caused. However, if one has purchased the RTI add-on while buying car insurance, he/she can be worry-free in case of major damages. 

3. Beneficial In Case of Theft: Car theft is common in India. Someone with a malicious intention can steal your car. All the money that you spent on buying a brand-new car will go in vain without the RTI coverage.

4. Beneficial In Case of Total Loss: Total loss is a situation where a car is so damaged that repairing it would cost more than its resale value. Thus, it would be better to salvage the car and keep what little amount you receive. RTI can prove to be a boon in such a situation. It will help you get the entire value of the car without worrying about damage, repairs, or salvage.

5. Available With Own Damage: A car insurance policy can be of two types. First is the basic Third-party Liability coverage and the second is a Comprehensive policy that offers multiple coverages. The Return to Invoice Add-on is available with a Comprehensive car insurance policy i.e. Own Damage cover. Thus, you can increase the benefit offered by a Comprehensive policy with the help of RTI.

The Return To Invoice cover instantly springs into action when your car experiences damage beyond repair i.e. total loss or when your vehicle gets stolen.

There could be a number of reasons that could cause a car to be considered as a total loss. Here are a few:

This is when you can make a claim against the RTI in car insurance policy. Note that without this cover, you would be liable to only the IDV of the car in a total loss or theft situation. 

However, if you don’t have a RTI cover, the depreciation costs will be incurred as the following, depending on the age of the vehicle. 

Depending upon the insurance company, the Return to Invoice cover is applicable to cars that are less than 3 to 5 years old.

One can make a claim against this cover only in case of total loss to the insured car. Submitting the original invoice of the car may be necessary at the time of claim.

The Return to Invoice cover is very useful for those who buy it with their Comprehensive car insurance policy.

Since it is so beneficial, it can be purchased only under certain conditions.

Here is a list of situations where the RTI cover is not applicable.

It is very easy to calculate the sum insured associated with Return To Invoice Cover in India. To know the claim amount against your RTI cover simply take a look at the amount on the invoice of your car. The claim amount can be approximately equal to the amount on the invoice. This is how you can calculate RTI.

Return to Invoice (RTI) cover can be opted under the following circumstances:

Return to Invoice is additional coverage that you can choose to buy along with your comprehensive car insurance policy. Since it increases the scope of coverage it will also increase the cost of a policy.

You can expect to pay around 10% more premium if you buy the Return to Invoice. This cost is usually negligible as compared to the sum insured that RTI offers in the time of need.

Here is an example that will help you understand how a claim against RTI is paid:

Consider you have bought a brand-new SUV for your family. The cost of this car is 15 Lakh rupees.  You spent a little more than one year driving it and enjoyed these drives to the fullest. The age of your car is 1 year and 2 months.

Consider, you live in a flood-prone area and your parked car was submerged in water for a long time. Your SUV has suffered irrevocable damage (total loss) and now you need to make a claim.

The following table will show how your claim is settled against total loss with and without Return to Invoice Add-on:

One can buy many car insurance add-ons with their policy. However, every add-on is not beneficial to every policyholder.Thus, it is said that a person should first assess his/her personal requirements and then buy a car insurance Add-on.

For example, buying an Accessories cover and having no additional accessories in the car will be a waste of coverage and money. 

Similarly, buying a Return To Invoice cover will not be beneficial for everyone.Here is a list of profiles that are suitable for purchasing the RTI Add-on:

Any add-on bought with a car insurance policy is approximately valid for one year. Likewise, the Invoice Protection Cover will also be valid for one year after which the policyholder needs to renew his/her car insurance policy. Note, it is also possible that an insurer decides to increase or decrease the validity of the policy. Thus, it is a good idea to take a look at the policy document for the mention of an expiry or renewal date.

As mentioned earlier, an add-on should be chosen to suit a personal requirement. When a person decides to buy a zerp depreciation or RTI cover, he/she should consider certain factors that will decide the usefulness of an add-on. When in doubt, ask yourself the following questions:

Here is a detailed comparison of the Return to Invoice and Insured Declared Value in car insurance.

Here are a few points that will summarise all you need to know about RTI before buying: