Return To Invoice Cover - Is It Possible?

What Is The Return To Invoice Cover! A New Car For Old?

Have you ever been sold a Return To Invoice Insurance cover? Wondered what it’s all about?

What if an Insurance Cover could get you your stolen or completely damaged car back? Not from time of course, but in a different way!

In this article, we shall speak about a novel type of car insurance, Return to Invoice Cover. What exactly is the Return to Invoice cover? What are the benefits you get by taking this Add-on cover? Read on to know more about this concept.

Car Insurance – A Brief Background

Usually, people are familiar with two types of car insurance policies. Let us see what these two types of insurance covers are.

• Third-Party Liability Only (3rd party cover)
• Comprehensive Cover

The first named policy is a compulsory car insurance policy that covers any loss caused to a third party while we use our vehicle. The comprehensive cover takes care of the damages to the car during the course of its usage in addition to covering the 3rd party liability. The comprehensive cover is an extensive insurance cover that caters to the following

• Damages to the car
• Theft
• Legal liability to 3rd party
• Personal accident cover

An overwhelming number of people opt for the comprehensive insurance cover. There are other types of add-on covers like Zero Depreciation cover, Return to Invoice cover, and so on. We shall discuss about the Return to Invoice cover in this article.

Return to Invoice (RTI) Cover – The Concept

Before going into the details of the RTI cover, we shall see the shortcomings of the conventional comprehensive insurance policy. The comprehensive insurance policy does not cover all aspects. There is an element of depreciation involved in it. You have the concept of the Insured Declared Value (IDV). These factors reduce the amount of compensation available to the insured. In order to overcome these factors, you have the concept of the RTI cover.

Return to Invoice Cover – How does it work?

In the normal circumstances, depreciation plays a major part in deciding the IDV of the car. You must have seen a steady decline in the insured amount on a yearly basis when you renew your car insurance. Usually, depreciation is in the region of around 10% annually. Thus, it entails that in case of a ‘Total Loss’, you will not get anything more than the IDV.

The concept of Total Loss comes into effect when the cost of repairs is more than the IDV of the vehicle. It also applies in case of theft of the vehicle. In the normal comprehensive insurance cover, the maximum amount of claim is restricted to the IDV. In case you had taken a RTI cover, the insurance company would have paid you the invoice value of the car. There is no question of any depreciation or IDV. The RTI cover ensures that the insurance company pays you the original invoice value of your car. Hence, you get total compensation.

Return to Invoice Cover – How is it different from a Zero Depreciation Cover?

In very simple terms, Zero Depreciation cover is available for vehicles where the damages are repairable. You do not get this cover in case the damages to the car exceed its value. The RTI cover comes into effect when there is Total Loss to the vehicle either because of damages or theft. Alternatively, you can say that Zero Depreciation takes care of “Partial Loss” to the vehicle whereas RTI cover takes care of the “Total Loss” factor.

Return to Invoice Cover – When Is It Applicable?

The RTI cover is applicable only when there is Total Loss or Constructive Total Loss (Cost of repairs exceed 75% of the IDV subject to terms & conditions of policy). It is not available when there is a partial loss. The Zero Deprecation cover can take care of such partial losses.

The RTI cover comes into force in case of theft of vehicle. This is considered as Total Loss.

Return to Invoice Cover – How Is It Calculated?

– The IDV in the RTI cover is usually equal to the ‘On-Road’ price of the car. This implies that it includes the following.

• -Manufacturer’s Selling Price (Ex-Showroom price)
• -Road Tax
• -Registration Charges depending on the class / make of the car

The supporting document is the invoice of the original purchase issued to you.

In the event of a claim under RTI Insurance cover for the Total Loss / Constructive Total Loss or Total Theft, the liability of the insurance company is generally restricted to the lowest of the following two values.

• -On Road price of the vehicle at the time of the original purchase OR
• -Current replacement Price (On Road) in case the same model is available

You have to satisfy certain conditions as follows:

• -The claimant is the registered owner of the vehicle
• -Constructive Total Loss factor comes into the equation when the aggregate costs of repairs exceed 75% of the IDV subject to terms & conditions of policy.
• -Vehicle should not be older than 5 years from the date of invoice or the date of registration whichever is earlier (this however depends on the insurance company).
• -In case the vehicle is under hypothecation to a financier, you should obtain the No Objection Certificate from the financing institution.
• -The Total Loss / Constructive Total Loss or Total Theft claim should be admissible under the Section-I of policy.
• -This RTI insurance cover is not available for imported vehicles. This includes the fully built-up units imported from abroad (this however depends on the insurance company).

This Add-on RTI insurance cover is not available in the following cases.

• -If stolen vehicle is recovered before settlement of the claim.
• -Cost of accessories installed by the user (including electrical/non-electrical/electronic) and bi-fuel kits that are not insured at the conception of this policy
• -Facilitation charges paid to intermediary / dealer for registering the vehicle
• -Obsolete models (out of production) are also not eligible.

Return to Invoice Cover – What are the advantages?

Let us look at the advantages of taking RTI insurance cover for your vehicle.

• -In case of an accident / theft where there is total loss, the RTI insurance cover enables you to claim an amount equal to the original invoice value of the car.
• -The value of vehicle in insurance policy remains equal to the On-Road price of the car, for the purpose of Total Loss when you had bought the vehicle irrespective of IDV.
• -The RTI insurance covers road tax and registration charges paid by you. This is not available in case of Zero Depreciation Add-On cover.
• -The RTI cover is an add-on cover or rider on the comprehensive car insurance cover. Hence, it entails paying an additional premium.

Return to Invoice Cover – What Are The Drawbacks?

Before buying any car insurance policy, you should know the drawbacks as well. The RTI insurance cover has its disadvantages as follows.

• -This cover is not available for partial loss to the vehicle. You can avail this cover only if there is Constructive Total Loss to the vehicle. –
• -The RTI insurance cover is not available for vehicles older than 60 months because the depreciation factor in case of vehicles older than 60 months is considerable. However it depends on the insurance company as how long they intend to offer this cover.

Return to Invoice Cover – Who Should Opt For It?

• -As a matter of prudence, every purchaser of a new car should preferably go for this RTI insurance cover.
• -People living in theft prone areas should do well to have this add-on insurance cover.
• -If you plan to go on long drives on the highway frequently, it is better to have this RTI insurance cover.

Return to Invoice Insurance Vs Zero Depreciation Vs Comprehensive car Insurance

Here is a Comparison

RTI Insurance Cover

IDV - Equal to invoice value at time of purchase

Applicability -For cars up to 5* years old

Claim in case of partial loss - Not triggered

Claim in case of total loss (This includes costs of repairs exceeding IDV and Constructive Total Loss (more than 75% of IDV) - Claim up to 100% of Invoice Price or the On-road price of vehicle on date of claim whichever is less (No need for repairing the vehicle)

Claim in case of theft - Claim up to 100% of Invoice Price or the On-road price of vehicle on date of claim whichever is less

Zero Depreciation Cover

IDV - The Invoice Value is depreciated as per standard table.

Applicability - For cars up to 5* years old

Claim in case of partial loss - Triggered

Claim in case of total loss (This includes costs of repairs exceeding IDV and Constructive Total Loss (more than 75% of IDV) - Claim up to IDV value (This does not include road tax and registration.

Claim in case of theft - Claim up to IDV

Comprehensive car insurance

IDV - The Invoice Value is depreciated as per standard table.

Applicability - Applicable to all cars irrespective of age with appropriate reduction in IDV

Claim in case of partial loss - Claim depreciation factor is applicable

Claim in case of total loss (This includes costs of repairs exceeding IDV and Constructive Total Loss (more than 75% of IDV) -Claim up to IDV amount

Claim in case of theft - Claim up to IDV amount

Which of the add-on covers is better? Zero Depreciation or Return to Invoice?

The RTI insurance cover is applicable only when there is a total loss or constructive total loss or total theft. You get compensation up to 100% of the On-Road price of the car at the time of the actual purchase or cost of replacement. This amount includes the road tax and registration fees paid by you. In the case of Zero depreciation policy, these amounts are not admissible in case of claims.

Hence we can say that ‘Zero Deprecation Cover is better for partial loss and RTI insurance cover is preferable in case of total loss to the vehicle.”

Should I need to file an FIR for lodging claim in case of theft? Is there any waiting period for honouring the claim?

Yes, you need to file an FIR with the local police authorities for the theft of the car and inform the occurrence to the insurance company immediately. You should produce both the keys of the car, original title documents, police papers and police investigation report to the insurance company.

Why do insurance companies not offer RTI insurance cover for vehicles more than 60 months?

In case of vehicles that are over 60 months old, the natural wear and tear is considerable. Under such circumstances, the depreciation value adds up to around 50% or more of the original cost of the vehicle.

Do you have to pay additional premium in case you wish to take a RTI insurance cover?

Yes, you have to pay a higher premium than you would normally do for a comprehensive car insurance policy. The amount of premium depends on the insurance company.

Is the RTI insurance cover available for additional accessories?

– this policy does not cover the cost of additional accessories installed by you. In case of installed bi-fuel kits, you should include them when you buy this policy. If you omit to do so, this policy does not cover such installed bi-fuel kits as well.

I do not reside in a theft prone area. I have installed anti-theft devices in my car. Should I go for an additional RTI insurance cover?

RTI insurance cover does not provide benefits in theft alone. There can be accidents, natural calamities like earthquakes and floods and man-made problems like riots. These instances can also cause damage to your car. RTI insurance cover can help you under such circumstances. You need to pay an extra premium to get protection against natural calamities and man-made incidents like riots and arson.

Final thoughts of Return to Invoice Insurance cover

It is better to be safe than sorry. You might have to pay a certain additional sum while taking the coverage, but it can be of great use in case of a calamity. You should take note of the additional benefits available in this RTI insurance cover. We trust we have cleared the concept of Return to Invoice insurance cover.