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A comprehensive car insurance policy has limited coverage. So, the concept of add-ons came into existence. But different addons serve different purposes. For anyone concerned about the car's invoice price in the event of theft or accident, Return to Invoice (RTI) cover serves the purpose.
RTI Cover in Car Insurance is an important add-on for car owners seeking full compensation for a stolen or damaged car.
In this blog, we will discuss everything about the RTI Cover in Car Insurance.
What is RTI Cover in Car Insurance?
Return to Invoice in car insurance is an add-on cover that provides the full invoice amount in case of total loss (damage beyond repair). You just have to pay an extra premium amount to secure yourself financially if any such situation arises.
"RTI Cover bridges this gap by compensating for the difference between the car's invoice value and its depreciated value."
How Does RTI (Return to Invoice) Cover Work?
RTI Cover generally compensates for the difference between the invoice value and IDV. Some insurers also include road tax and registration charges under the cover.
Depending on the insurer, the cover generally compensates for:
- The difference between the car's invoice value and its depreciated IDV
- Registration charges paid at the time of purchase
- Road tax paid for the vehicle (if covered under the policy terms)
Example for Better Understanding
If you purchased a car for Rs 10 lakh and its IDV reduced to Rs 7 lakh after three years. In such cases, a standard car insurance policy generally pays the IDV in case of total loss or theft. With RTI Cover, you can receive up to the original invoice value easily.
| Particulars | Without RTI Cover |
|---|---|
| With RTI Cover* | Original Invoice Value of Car |
| Rs 10,00,000 | Rs 10,00,000 |
| IDV After 3 Years | Rs 7,00,000 |
| Rs 7,00,000 | Situation |
| Car declared a total loss | Car declared a total loss |
| Claim Amount Payable | Rs 7,00,000 (IDV) |
| Up to Rs 10,00,000 (Invoice Value) | Financial Shortfall |
| Rs 3,00,000 | Nil or significantly lower |
Note*: The exact claim amount depends on the insurer's terms, policy conditions, and applicable deductions.
Why is RTI Cover Important for Cars?
A car starts losing its value from the day it is purchased. As the vehicle gets older, depreciation reduces its market value. This depreciation also decreases the claim amount that the insurer pays at the time of claim settlement.
- It safeguards the car owner from depreciation deduction.
- You will also get better compensation with RTI in case of full damage or theft.
- The gap between the claim amount and the purchase price will be decreased.
- Out-of-pocket expenditure reduces in case of full replacement.
What Does RTI Cover?
Here are some of the situations that RTI covers:
- Theft of the insured car if not recovered by the police.
- Total loss due to an accident, where the vehicle is damaged beyond repair.
- Irreparable damage caused by natural calamities.
How Much Does RTI Cover in Car Insurance Costs?
RTI (Return to Invoice) Cover is available as an add-on with a comprehensive car insurance policy. The cost of this add-on depends on multiple factors, which include:
- Car's invoice value: Higher-priced vehicles generally attract a higher RTI premium.
- Vehicle age: RTI Cover is usually available for newer cars and becomes less relevant as the vehicle ages.
- Car model and variant: Luxury and high-end cars generally have a higher add-on cost.
- Location of registration: Insurance premiums vary based on the city or region.
- Insurer's pricing: The cost of RTI Cover differs from one insurer to another.
The exact cost of RTI Cover differs by insurer, vehicle specifications, and policy terms. Check the premium quote from your insurer for the actual amount.
Difference Between IDV and RTI Cover
Both are completely different yet interlinked terms that a policyholder should know.
- IDV (Insured Declared Value) is the current value of your car after depreciation. The insurer pays the IDV amount if the car is stolen or declared a total loss.
- RTI (Return to Invoice) Cover is an add-on cover that covers the gap between the car's original invoice value and its depreciated IDV. Your IDV does not affect the compensation amount in case of total loss. But the invoice price is compensated by the insurer.
You can also refer to this table for a better understanding:
| Basis | IDV | RTI Cover |
|---|---|---|
| Meaning | Current value of the car after depreciation | Add-on cover that bridges the gap between the invoice value and IDV |
| Claim Amount | Based on the depreciated value of the car | Based on the original invoice value, subject to policy terms |
| Depreciation Impact | Depreciation reduces the claim amount | Reduce the loss caused by depreciation |
| Coverage Type | Included in the standard policy | Available as an optional add-on |
| Best For | All insured vehicles | New and high-value vehicles |
Who Should Buy RTI Cover?
RTI (Return to Invoice) Cover is not necessary for every car owner, but it can be a valuable add-on for:
- Owners of new cars
- People who have purchased expensive cars
- Drivers in theft-prone areas
- People who use their car regularly
- Car owners looking for maximum claim protection
Things to Consider Before Buying RTI Cover
RTI (Return to Invoice) Cover offers valuable financial protection, but it is also important to check a few factors before purchasing it. Here is the list for the same:
- Vehicle Age: RTI Cover is usually available only for newer cars, not older vehicles.
- Coverage Terms: Check the exact coverage of RTI Cover, whether it includes road tax and registration charges or not.
- Eligibility Conditions: Review the insurer's eligibility criteria before opting for the add-on.
- Additional Premium: RTI Cover increases the insurance premium, so compare the cost with the benefits offered.
- Car Value: The cover is generally more beneficial for new and high-value vehicles, where depreciation can lead to a larger financial loss.
- Usage of the Vehicle: If you drive frequently or travel long distances, this add-on will be beneficial for you.
- Policy Exclusions: Reading exclusions while buying any policy is very important.
Is RTI Cover in Car Insurance Worth Buying?
The simple answer will be yes. Without RTI Cover, the insurer generally pays the car's IDV, which decreases over time due to depreciation. RTI Cover is especially worth considering if:
- You have recently purchased a new car.
- Your vehicle has a high purchase value.
- You live in an area with a higher risk of theft.
- You want maximum protection against major financial losses.
Conclusion
To sum up, RTI Cover in car insurance can be worth buying if you own a new car and want better financial protection against full damage. It covers the gap created by depreciation in case of theft or a total loss.
By bridging the gap between the invoice value and the IDV, RTI Cover provides higher compensation than a standard policy alone. For car owners looking for added peace of mind and stronger financial security, it can be a valuable add-on to consider.
FAQs
No, RTI Cover in car insurance is generally available for new cars. It is generally offered to cars up to 5 years old. The eligibility criteria can vary depending on the insurer and policy terms.
You can claim RTI cover in car insurance when:
- The car has been stolen
- Loss not recovered
- Declared a full loss after an accident
No, RTI Cover does not apply to minor damages or regular repair claims but to cases of total loss.
No, RTI Cover is an optional add-on. You need to purchase it separately along with a comprehensive car insurance policy.
Yes, depreciation reduces the value of the car over time. As a result, the claim amount is generally lower than the original purchase price of the car in a standard policy.
Yes, if your insured car is stolen, RTI Cover helps you to receive compensation closer to the vehicle's original invoice value.
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