Return to Invoice Cover in Car Insurance

Understanding return to invoice cover in car insurance is crucial for safeguarding your vehicle investment. Learn about the benefits, inclusions, exclusions, and costs of RTI car insurance.
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3 min
05-November-2024

Have you ever wondered how to fully protect your car's value in case of total loss or theft? Considering the ever-depreciating value of cars, comprehensive car insurance often falls short when it comes to compensating you for the full value of your vehicle in case of a total loss. This is where Return to Invoice (RTI) cover in car insurance steps in, offering a valuable safety net for car owners.

What is Return to Invoice (RTI) cover in car insurance?

Return to Invoice (RTI) cover is an add-on available with most car insurance policies in India. It bridges the gap between the car's Insured Declared Value (IDV) and its actual market value at the time of claim settlement in case of theft or complete damage exceeding repair costs.

Benefits of RTI in car insurance

Return to invoice cover in car insurance offers numerous advantages that make it a worthwhile add-on. Here's why RTI car insurance is beneficial:

Full reimbursement

RTI car insurance provides the full invoice price, including road tax and registration fees.

Enhanced financial security

Return to Invoice cover eliminates the depreciation factor, ensuring you don't incur a financial loss.

Comprehensive coverage

It covers theft, total damage, and even natural calamities.

Peace of mind

Knowing you’re financially protected against total loss gives you peace of mind.

Investment protection

RTI cover ensures the amount you invested in your car is fully protected.

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What are the key exclusions of RTI in Car Insurance?

While RTI offers significant advantages, it's crucial to understand what's not covered:

  • Natural disasters: Losses arising from natural calamities like earthquakes, floods, or cyclones are typically covered under separate add-on covers.
  • Engine malfunction or mechanical breakdown: RTI is strictly for total loss due to theft or accident damage, not mechanical failures.
  • Wear and tear: Gradual deterioration of car parts due to regular use is not covered under RTI.

What are the inclusions of RTI in car insurance?

RTI car insurance includes several comprehensive coverages designed to protect your investment.

  • Total loss: Covers the car in the event of total damage beyond repair.
  • Theft: Provides the invoice value if the car is stolen and not recovered.
  • Natural disasters: Covers damages from floods, earthquakes, and other natural calamities.
  • Accidents: Covers complete destruction due to accidents.
  • Invoice price: Ensures the reimbursement includes the full invoice value, including road tax and registration fees.

How RTI cover works

Return to Invoice (RTI) cover in car insurance is an add-on that ensures you receive the full invoice price of your car in the event of total loss or theft. Here’s a detailed breakdown of how RTI cover works:

1. Purchase of RTI cover:

  • When you buy a car insurance policy, you have the option to add RTI cover as an add-on. This add-on can be purchased at the time of buying the policy or during the policy renewal.

2. Total loss or theft occurs:

  • In the unfortunate event of your car being completely damaged beyond repair (total loss) or stolen and not recovered, the RTI cover comes into play.

3. Claim process initiation:

  • You initiate a claim with your insurance provider. The claim process for RTI cover involves submitting necessary documents like FIR (in case of theft), the original invoice of the car, and any other required paperwork.

4. Assessment by the insurance provider:

  • The insurance provider assesses the extent of the damage or verifies the theft. In cases of total loss, they determine if the car is beyond economical repair.

5. Calculation of payout:

  • With a standard insurance policy, the payout is based on the Insured Declared Value (IDV), which factors in depreciation. However, with RTI cover, the payout is based on the original invoice value of thecar.
  • The RTI cover bridges the gap between the IDV and the original purchase price, including road tax and registration fees.

6. Payout to the policyholder:

  • The insurance company pays you the full invoice value of the car. This includes the ex-showroom price, road tax, and registration fees as mentioned in the original purchase invoice.
  • Any deductibles or voluntary excess agreed upon in the policy are subtracted from the final payout.

Example scenario

Imagine you bought a car two years ago. Without RTI cover, in the event of total loss, you would receive the IDV, considering the depreciation of your car. However, with RTI cover, you would receive the full invoice amount (minus any deductibles), ensuring you can replace your car without financial strain.

 

How to calculate RTI cover

Calculating RTI cover involves understanding the car’s original invoice price, including taxes and registration fees, and subtracting any applicable deductibles. The RTI premium is then calculated based on the car's age, make, model, and the insurance provider's terms.

Difference between IDV and RTI

Feature IDV (Insured Declared Value) RTI (Return to Invoice Cover)
Coverage Market value of the car at the time of insurance renewal, considering depreciation Original invoice value of the car (minus depreciation)
Purpose Determines the base sum insured for your car Provides additional coverage to bridge the gap between IDV and invoice value
Cost Included in the base car insurance premium Offered as an optional add-on with an additional premium

How much does RTI cost?

The cost of RTI cover in car insurance varies based on factors such as the car’s make, model, and age, as well as the insurance provider. On average, the RTI premium in car insurance is about 10-15% higher than standard policies, reflecting the comprehensive protection it offers.

In conclusion, return to invoice cover in car insurance is an invaluable add-on for car owners who want to protect their investment. By ensuring you receive the full invoice price in the event of total loss or theft, RTI car insurance offers peace of mind and financial security. When considering car insurance options, including RTI cover can provide comprehensive protection against unforeseen events.

Frequently asked questions

Do car insurance companies offer a return to invoice add-on to cars older than 5 years?
Typically, car insurance companies do not offer a return to invoice add-on for cars older than 5 years. This add-on is usually available for new and relatively new vehicles to ensure maximum coverage.
Who is recommended to purchase return to invoice add-on?
Return to invoice add-on is recommended for new car owners, especially those who have taken a loan for their vehicle. It is also beneficial for those who want comprehensive financial protection against total loss or theft.
Is RTI cover provided under limited conditions?
Yes, RTI cover is provided under specific conditions, such as for cars less than 5 years old, and does not cover non-standard accessories, commercial vehicles, or damages from illegal activities.
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*T&C Apply - Bajaj Finance Limited (‘BFL’) is a registered corporate agent of third party insurance products of Bajaj Allianz Life Insurance Company Limited, HDFC Life Insurance Company Limited, Future Generali Life Insurance Company Limited, Bajaj Allianz General Insurance Company Limited, SBI General Insurance Company Limited, ACKO General Insurance Limited, ICICI Lombard General Insurance Company Limited, HDFC ERGO General Insurance Company Limited, Tata AIG General Insurance Company Limited, The New India Assurance Company Limited, Cholamandalam MS General Insurance Company Limited, Niva Bupa Health Insurance Company Limited , Aditya Birla Health Insurance Company Limited, Manipal Cigna Health Insurance Company Limited and Care Health Insurance Company Limited under the IRDAI composite CA registration number CA0101. Please note that, BFL does not underwrite the risk or act as an insurer. Your purchase of an insurance product is purely on a voluntary basis after your exercise of an independent due diligence on the suitability, viability of any insurance product. Any decision to purchase insurance product is solely at your own risk and responsibility and BFL shall not be liable for any loss or damage that any person may suffer, whether directly or indirectly. Please refer insurer's website for Policy Wordings. For more details on risk factors, terms and conditions and exclusions please read the product sales brochure carefully before concluding a sale. Tax benefits applicable if any, will be as per the prevailing tax laws. Tax laws are subject to change. Tax laws are subject to change. BFL does NOT provide Tax/Investment advisory services. Please consult your advisors before proceeding to purchase an insurance product. Visitors are hereby informed that their information submitted on the website may also be shared with insurers. BFL is also a distributor of other third party products from Assistance Services providers such as CPP Assistance Services Pvt. Ltd., Bajaj Finserv Health Ltd. etc. All product information such as premium, benefits, exclusions, sum insured, value added services, etc. are authentic and solely based on the information received from the respective insurance company or the respective Assistance service provider company.

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