Return to Invoice Cover (RTI) in Car Insurance

Return to Invoice insurance cover is an optional add-on insurance cover that provides full compensation for the original invoice of your car if it is completely damaged by an accident or theft.

Features of Return To Invoice Cover

1. Available with comprehensive car insurance plans and standalone own-damage plans.
2. Costs around 10% more than standard comprehensive/standalone own-damage policy but helps the policyholder get registration charges, depreciation amount as well as road tax charges in addition to the selling price of the car in case of total loss.
3. It is applicable only if the insured’s car is extremely damaged and is not in a usable condition. It is not applicable in case of minor damages.

How Does RTI Cover Work?

In car insurance, policyholders receive their car’s Insured Declared Value (IDV) as compensation whenever a claim is filed. However, IDV is subject to depreciation every passing year, starting from the very next year of your car’s purchase. Due to this provision, your claim amount becomes significantly less after a certain period. With RTI cover, the insurer reimburses the ex-showroom amount during a claim settlement. In addition, it may also reimburse you for additional taxes if the RTI policy allows.

Ideally, the Return To Invoice cover should be opted by all car owners, however, it is extremely important for the following people:

1. People living in areas where car theft is common
2. People do not have secure parking spaces
3. People who travel for long distances regularly and are vulnerable to road accidents.

Benefits of Return to Invoice Add-On Cover

Some of the benefits of the Return to Invoice add on cover for your car is as follows:

• Increases the Coverage

Return to Invoice add-on cover is the extra cover that the policyholder can purchase along with their standard car insurance plan. With this add-on, you can customize your insurance plan and also increase the coverage of the plan. As this cover is not provided free of cost, some policyholders refrain from buying it despite the benefits offered.

• Advantageous during Complete Loss

Total loss of a car is a condition, wherein the vehicle is beyond repair, and repairing it would cost more than its resale value. Therefore, it is advisable to not spend money on the repair of the car, which is in total loss condition. Purchasing an RTI cover can act as a boon in such a condition as it would be helpful for the policyholder in getting the entire value for their car without worrying regarding the cost of repair, damage or salvage.

• Coverage for New Cars

Generally, individuals are more concerned regarding their new car in comparison to the used car. Also, when the new car gets into any accident and incurs any kind of damages, the owner gets more emotionally drained. However, if an individual has bought Return to Invoice add-on cover along with the standard car insurance plan, the policyholder can get worry-less even if there is any major damage.

What is Covered/Not Covered in Return to Invoice (RTI)

A Return to Invoice add-on cover can be a safety net for policyholders in the long run. The following provisions are included in a standard RTI cover:

1. Policyholders get the ex-showroom price of the car and not the depreciated value.
2. Most insurers reimburse on-the-road costs, which include registration charges and road tax.
3. Monetary compensation is only available in case the car sustains damages because of theft or road accidents.

What Is Not Covered by an RTI Add-On?

Policyholders cannot claim compensation under the following circumstances:

1. If your car is partially damaged: When you are involved in a road accident or have recovered your car after theft, and it is partially damaged, an RTI cover doesn’t apply.
2. Depreciation on spare parts is not covered under the RTI add-on, unless you own a Zero depreciation cover.
3. Compensation for cars older than 3 years is not covered under RTI policies.
4. Undeclared add-ons/accessories are not covered.
5. Damages sustained because of the illegal use or driver’s negligence.

How Return To Invoice Is Calculated?

RTI does not have a specific sum insured value. Rather, it helps you recover the gap between your car’s IDV and the actual invoice value. Hence, there is no formula to calculate the RTI claim amount.

Let’s take a look at the following example to understand how RTI claim works:

Original invoice value (on-road price) = ₹12,00,000

Current IDV (market value covered by base policy) = ₹9,00,000

Your car is stolen.

Without RTI: You get ₹9,00,000 (minus deductible, if any).

With RTI: You get ₹12,00,000 (i.e., full invoice amount, minus deductible).

So RTI adds that extra ₹3,00,000 coverage, bringing you back to your original purchase value.