Return to Invoice: What is RTI Cover in Car Insurance?

What Is Return To Invoice?

Return to Invoice Cover, or RTI, is a car insurance add-on that ensures you get the full invoice value of your vehicle in case of total loss or theft. Without this feature, your insurance usually only covers the car’s depreciated value. RTI also includes registration fees and road taxes along with the original price of the car, helping you recover the complete cost. It bridges the gap between the current market value and what you initially paid. This add-on is handy for new or high-value cars, giving you extra financial protection.

How Does RTI Cover Work?

Return to invoice insurance is activated only in two situations: when your car is stolen and not recovered or when it’s declared a total loss due to irreparable damage. In any case, RTI offers the original invoice value instead of the depreciated market value.

To claim RTI, follow the below steps:

1. Notify your insurance company immediately if your car is stolen or completely damaged

2. Lodge a First Information Report (FIR) with the police in case of theft

3. Fill out the claim form provided by your insurer, clearly mentioning that you have the RTI cover

4. The insurer will inspect the car’s condition or verify the theft details. If they find the loss is genuine, they will approve your claim.

5. You will be paid the invoice value of your car, including taxes and registration charges, instead of the current depreciated value.

Here are the documents required:

• Original invoice showing the car’s price, including all taxes and charges

• Copy of your car insurance policy showing the RTI add-on

• FIR filed with the local police, especially for theft cases

• Copy of the car’s registration certificate to confirm ownership

• Duly filled-out claim form from your insurer

• If the car has been damaged, a repair estimate from the garage confirming it’s a total loss

• Copy of the driver’s license

Example of RTI In Car Insurance

You just bought a brand new hatchback for ₹9 lakhs and live in a flood-prone area. After 1.5 years, a severe flood hits the neighbourhood, washing away your car, and despite every effort, you cannot recover it.

By opting for Return to Invoice (RTI) coverage while buying a car insurance policy, you will benefit. This extra cover will ensure your insurance provider will compensate you with the invoice value of the car, not the depreciated one. Here is how this process works:

• Occurrence of Loss: Your car has been lost in the devastating floods. Quickly report the incident to your insurance company and file an FIR with the local police.

• Raising the Claim: You get in touch with your insurer and initiate a claim under the RTI cover. You provide all required documents, including the FIR, the car’s original invoice, and any photos of the event.

• Survey and Assessment: The insurance company assigns a surveyor to investigate, who checks your documents and the extent of the damage. Since your car is unrecoverable, it’s declared a total loss.

• Claim Settlement: After the assessment, the insurance company processes the claim, and you receive the full invoice amount of ₹9 lakh, minus any deductibles. Without RTI, you would have received only the depreciated Insured Declared Value (IDV), which would be much lower.

Benefits of Having Return to Invoice

Full Compensation for Total Loss

RTI coverage ensures you receive the full invoice value of your car in the event of a total loss, such as severe damage or theft.

Protection Against Depreciation

With RTI coverage, you are protected against the depreciation cost of the car. In case of a total loss, you won’t have to worry about the reduced market value of your car.

Financial Security

RTI covers the gap between the insured declared value and the invoice value, ensuring you are not out of pocket for the difference.

Coverage for On-Road Costs

RTI coverage often includes on-road costs, such as registration fees, road tax, and insurance premiums. That means you are reimbursed for these additional expenses, providing comprehensive financial protection.

Peace of Mind

Knowing that you are fully covered in case of a total loss or theft offers peace of mind. You can drive your car without worrying about financial loss due to unforeseen events.

Enhanced Resale Value

Having RTI coverage can enhance your car’s resale value. Potential buyers may find your car more attractive, knowing it has been well-protected, which can lead to a better resale price.

What is Covered and Not Covered in Return to Invoice

Living in an Area Prone to Theft

If you live in a neighbourhood where car theft is common, RTI can provide peace of mind. If your car is stolen and can’t be recovered, RTI ensures you get the full invoice value, not just the depreciated IDV.

No Secure Parking is Available

If you don’t have access to secure parking and often park on the street or in open spaces, RTI offers full invoice value, adding an extra layer of protection.

Financial Stress

Unexpected car expenses can increase financial stress. RTI cover eases this by providing necessary compensation.

Living in a Natural Calamity Prone Area

Natural disasters like floods, storms, or earthquakes can cause severe damage to vehicles. If you live in an area vulnerable to such calamities, RTI can be a valuable addition to your policy.

Small Dents or Minor Damages

RTI doesn’t cover small dents or minor damages. It is designed specifically for situations where the car is stolen or destroyed. For smaller issues, you would need to rely on your regular comprehensive insurance.

Third-party (TP) Liability Policy

RTI isn’t applicable if you only have third-party insurance. While third-party insurance covers damages you cause to others, it doesn’t cover your own car. RTI is an add-on that is available with comprehensive car insurance.

Age of the Car

RTI is available for new cars up to 3 years old. As your car gets older and its value depreciates, insurers may stop offering RTI for it. Always check with your provider for the specific age limits.

No FIR Filed

In the event of a car theft, filing an FIR to claim RTI is crucial. If you don’t file one, your claim for the stolen vehicle won’t be processed.

How Do You Calculate RTI?

The Return to Invoice amount is calculated by comparing the original invoice value of the car with its current market value. The formula is:

Several factors influence the RTI calculation:

(RTI Amount) = (Invoice Value) – (Depreciated Value)

• Invoice Value: The car’s original price listed on the invoice, including the ex-showroom price

• Road Tax: Tax paid to the government for vehicle use on public roads, varying by state.

• Registration Fees: Fees for registering the vehicle with the RTO, including the registration certificate and number plate charges.

• Depreciation: RTI covers the full invoice value without accounting for the car’s depreciation, making it advantageous.

• Policy Terms: The insurance policy’s terms, including coverage details and exclusions, can affect the RTI amount.

Here’s an example to illustrate RTI calculation:

• Invoice Value: ₹10,00,000 (includes ex-showroom price, road tax, and registration fees)

• Depreciated Value: ₹7,00,000 (current market value after depreciation)

• RTI Amount Calculation: ₹10,00,000 – ₹7,00,000 = ₹3,00,000

In this case, the RTI amount would be ₹3,00,000, payable by the insurance company in the event of a total loss or theft.

What is the Cost of Return To Invoice?

Adding RTI coverage generally increases your car insurance premium by 8% to 10%. For instance, a ₹10,000 policy could go up to approximately ₹10,800 to ₹11,000. The exact increase varies with the car’s details, the insurer’s rules, and where you live.

How to opt for RTI Cover?

With an Active Comprehensive Plan

Adding an RTI cover is simple if you already have a comprehensive car insurance plan. Just request this add-on when you renew your policy. Contact your insurance provider during renewal and ask them to include RTI coverage. Note that an additional premium may apply for this extra protection.

Without an Active Comprehensive Plan

If you don’t currently hold a comprehensive car insurance plan, you’ll need to secure comprehensive coverage before you can add RTI. Follow these steps:

• Purchase Comprehensive Coverage: First, select a comprehensive car insurance plan that fits your needs. This policy will cover third-party liabilities and damage to your vehicle caused by accidents, natural events, theft, and other risks.

• Add RTI Cover: After securing a comprehensive policy, you can add the RTI cover. You can do this either when you first buy the comprehensive policy or during its renewal.

• Switching Policies: If you currently hold a basic third-party liability policy, you can upgrade to a comprehensive policy when it’s time for renewal. Alternatively, you can cancel your existing policy and purchase a new comprehensive policy with RTI coverage.

How Long is The Invoice Protection Cover Valid?

The RTI cover typically lasts for one year. You must renew this additional coverage annually along with your comprehensive car insurance policy. The cover duration can vary depending on your insurer and chosen plan. Some insurers may offer RTI coverage for cars up to three years old. To renew or extend your RTI coverage, renew your comprehensive car insurance policy and include the RTI add-on.

Who Should Go for RTI Coverage in Car Insurance?

• Car owners whose vehicles are less than three to five years old

• Cars with a comprehensive car insurance policy and includes RTI. Third-party insurance cannot include RTI.

Examples of typical candidates for RTI Coverage:

• Those who have recently acquired a new vehicle

• Individuals residing in areas known for high car theft rates

• Residents of areas frequently affected by natural disasters such as floods or earthquakes

What is the Difference Between RTI and IDV?

Which Add-on Cover is Better: ZERO Depreciation or RTI?

Important Things to Know About RTI Cover

• RTI is an optional car insurance add-on that provides extra protection. Opting for it will increase your car insurance policy’s overall premium, as it covers a broader scope than standard policies.

• RTI coverage covers vehicles less than three years old. Older cars may not be eligible, as their value depreciates significantly over time.

• The RTI add-on only applies in case of a total loss, such as a stolen or damaged car beyond repair. It does not cover other damages, like minor accidents or repairs that can be fixed.

• RTI allows the policyholder to claim the complete amount they originally paid for the vehicle, including the car’s ex-showroom price, registration, and taxes, instead of just the depreciated value.

• To fully benefit from RTI, pair it with a comprehensive car insurance policy. While RTI covers total loss or theft, comprehensive insurance ensures coverage for a broader range of potential damages.

Frequently Asked Questions

1. Is a return to invoice insurance worth it?

Return to Invoice insurance is a valuable option for new car owners. It offers coverage for the entire invoice amount in the event of total loss or theft, which extends beyond the protection provided by standard policies. However, it might not be as cost-effective for older or used cars.

2. How many years is the return to invoice cover?

RTI insurance usually offers protection for up to 3 years from when you buy your car, but this timeframe might differ depending on the insurer and the specifics of the policy. It is essential to check the policy details to ensure it suits your needs.

3. Is RTI insurance available for all vehicles?

RTI insurance is often available for new vehicles and those up to three years old but is typically not offered for older or used cars. It is also not available for commercial vehicles. Be sure to check with your insurer for detailed eligibility and policy information.

4. Can I add RTI insurance to my existing car insurance policy?

You can opt to add RTI insurance to your existing car insurance policy. This add-on is usually available during policy renewal or when buying a new policy.

5. Is RTI insurance mandatory?

No, RTI insurance is not compulsory. It is an optional add-on that offers extra protection for total loss or theft.