Return to Invoice vs Zero Depreciation in Car Insurance
Zero depreciation and RTI (Return to Invoice) are add-ons that help to cover gaps left by a standard car insurance policy.
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What is Zero Depreciation Car Insurance?
The zero depreciation cover is an optional car insurance add-on with a comprehensive or standalone own damage policy. Car insurance companies also often use alternative names for the zero depreciation cover, such as zero-dep, nil depreciation, and bumper-to-bumper cover. You get this at an additional premium, which is slightly more than the standard policy. With the zero depreciation insurance, the insurer cannot deduct the depreciation costs incurred by the replaced or repaired parts when settling an accidental claim.
Having nil depreciation cover with your car insurance can help you save money and reduce your out-of-pocket expenses. Under this add-on, all parts damaged in any accident, such as plastic, nylon, rubber, and glass, are fully covered at 100% of the costs, whereas the costs of tyres, tubes, and the battery are covered at 50% when you file a claim.
However, before purchasing the zero depreciation insurance, it is essential to understand that insurers typically offer this policy for cars that are generally 5 to 7 years old. Apart from that, policyholders can also file a limited number of zero depreciation claims under one policy year as per the policy terms and conditions.
*Disclaimer: Some insurers may also offer zero depreciation add-on for cars older than 5 - 7 years.
What is Return to Invoice Cover?
The RTI or the return to invoice, is an add-on with the own damage insurance available only at an additional premium. With the return to invoice insurance, the policyholder is liable to receive the invoice value of the insured vehicle instead of just the IDV in the event of theft or if your vehicle is damaged beyond 75% of its market value (total loss).
An Insured Declared Value (IDV) is the current market value of the car after deducting the depreciation cost as per the vehicle's age. It is the maximum payout that the insurance company will pay if the car is stolen or totally damaged.
To bridge the gap between the IDV and the invoice value of the insured vehicle at the time of purchase, insurers offer the return to invoice cover. It is always advisable to check if your car is eligible for the RTI add on as per the insurance company. Policyholders must also keep in mind that this add-on cover is only useful in case of fire, theft, or total damage, and cannot be utilised as an option for minor repairs and dents.
Return to Invoice vs Zero Depreciation Cover
The table below mentions the difference between the return to invoice and zero depreciation car insurance add-on cover:
| Parameter |
Zero Depreciation Cover |
Return to Invoice Cover |
| Definition |
The add-on covers accidental claims without deducting any depreciation costs on repaired and replaced parts. |
Return to Invoice allows a policyholder to receive compensation equal to the invoice value of the insured car instead of the IDV. |
| What does it do? |
It fills the difference between the actual cost of various car parts and their depreciated value. |
It bridges the gap between the insured car's IDV and the car's original value, thereby increasing coverage and payout. |
| Purchase Limit |
A zero-dep cover can be purchased for cars of up to 5-7 years, depending upon the insurer. |
An RTI cover can mostly be bought for cars that are 3 years old or less, as per the insurer. |
| Example |
Mr. A's car got damaged in an accident. However, he has zero depreciation cover as a part of his comprehensive car insurance policy. This cover helped Mr. A to get a better claim settlement amount and slightly more than a standard car policy could offer. |
Ms. B's car was stolen and could not be traced. Since she has the return to invoice cover as a part of her motor insurance policy, she got the original invoice price of her car at the time of claim settlement. |
Over to You!
Both RTI and zero depreciation add-ons enhance the coverage of a car insurance policy, but they serve different needs. Zero depreciation helps you avoid out-of-pocket expenses due to depreciation when repairing your car after an accident. RTI, on the other hand, is useful if your car is stolen or damaged beyond repair, as it ensures you receive the full invoice value instead of its depreciated value, i.e, the IDV. Choosing the right add-on basis the scope of insurance cover you would need for your car can significantly reduce financial stress at the time of claim insurance claim settlement.
