Whether you buy a comprehensive car insurance policy or a third-party liability cover, none of these covers the cost of ownership and depreciation. This is where car insurance add-on covers like Return to Invoice and Zero Depreciation come into the picture. Let us discuss these add-ons and understand the difference between them.
Everything depreciates with time, and so does your car. But did you know that depreciation affects your car claim pay-out as well? If your car encounters damage in an unfortunate accident, such as a collision, your insurance provider will pay for the damage repairs after deducting the amount of depreciation on the car and its parts.
However, if you have zero depreciation add-on cover in your car insurance policy, you can easily claim the deducted value of depreciation. This can also save your out-of-pocket expenses.
But before buying zero depreciation car insurance add-on cover, here are a few points that you must know:
The insurance price of a vehicle is largely dependent on the Insured Declared Value or IDV of the vehicle. In case of an accident, if you have a comprehensive vehicle insurance policy, you get back the IDV only.
But what if your car encounters a total loss where damages are beyond repair? In such a situation, return to invoice cover will come to your rescue. Return to invoice (RTI) is an add-on that covers the gap between the actual value of your car and its IDV. RTI helps to fetch the purchase value of your car in case of theft or a total loss.
However, before opting for the return to invoice cover, here are a few things that you must know:
Let us now understand the difference between the return to invoice and zero depreciation add-on cover with the help of this table:
|Parameter||Zero Depreciation Cover||Return to Invoice Cover|
|Definition||A zero depreciation cover offers coverage for the depreciation borne by the insured car and its parts at the time of claim settlement.||Return to Invoice allows a policyholder to receive compensation equal to the invoice value of the insured car.|
|What does it do?||It fills the difference between the actual cost of various parts of the car and its depreciated value.||It bridges the gap between the insured car’s IDV and the original value of the car.|
|Purchase Limit||A zero dep cover can be purchased for cars of up to 5 years.||An RTI cover can only be bought for cars that are 3 years old or less.|
|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 worked as a financial help because he got compensation for the depreciated value of the damaged parts of the car at their original cost.||Mrs. 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.|
In the aforementioned examples, we can see that one sensible decision of these two people has saved them from a lot of financial loss that they would have faced without these add-on covers.
A car insurance policy is mandated by law in India. It also provides you financial protection in case of unfortunate events like accidents or theft of your car. However, sometimes, a comprehensive motor insurance policy becomes insufficient which is why add-ons like zero depreciation and return to the invoice cover are offered.
With zero dep vs RTI, you can understand why these two add-ons are the most advantageous. Nonetheless, it is up to you to decide whether you should buy these add-on covers with your four-wheeler insurance policy or not.
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