Return to Invoice (RTI) in Car Insurance

Return to invoice cover or RTI in car insurance provides compensation to the policyholder in case the insured car is stolen or gets damaged and declared a total loss. Under the RTI car insurance, the policyholder is eligible to get the full compensation from the insurer that is the last invoice amount of the car.

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What Is Return To Invoice (RTI) in Car Insurance?

Return to invoice cover is an add-on in four-wheeler insurance that a policyholder can get with a comprehensive car insurance policy for an extra premium amount. The RTI in car insurance compensates a policyholder with an amount equal to the invoice value of the car if it's considered total loss or is damaged beyond repair.

How Does the RTI Cover in Car Insurance Work?

A basic car insurance policy would not fetch you the actual value of your car or the money you have invested at the time of purchasing the car. Considering the depreciation rate, 5% depreciation is applied on the car which is 6 months old from the day of purchase, while 10% for one year. In such a case, you tend to lose quite a huge amount.

But with return to invoice cover, you do not have to bear the depreciation of your car. The insurer will pay the full amount (original invoice value) of your car in case of theft or total loss until it reaches the age of 3 years.

Benefits of Return to Invoice in Car Insurance

Here are some benefits of the return to invoice cover in a car insurance policy:

• Full Financial Compensation: The primary benefit of return to invoice cover in car insurance is that you get the complete original invoice value of your car, including taxes and registration charges.
• Beneficial in case of Total Loss: RTI in car insurance is extremely useful if the car gets damaged beyond repair due to accidents, natural disasters, fire, etc.
• Protection Against Theft: The return to invoice insurance offers the complete

When Return to Invoice Cover Comes into the Picture?

This cover comes to your rescue to cover the gap between the IDV and the invoice value of your car. It is an optional cover to fetch you the complete amount of loss when you claim insurance in case of an accident or total loss.

However, you can opt for RTI in car insurance at an additional cost. Usually, RTI costs 10% more than your comprehensive car insurance. The return to invoice cover is available until your car reaches a specific age i.e. 3 years.

When is the RTI Cover Applicable?

The return to invoice is only applicable in the following situations:

• If your car is stolen and the police are unable to trace it, the RTI cover comes in useful.
• The return to invoice is applicable if the insured car is a total loss due to an accident, i.e., when the cost of its repair is more than its IDV.
• Return to invoice insurance is only applicable to cars below 3 or 5 years (depends on the insurer's terms & conditions).

How is RTI Calculated?

If your car is declared a total loss, then if you do not have an RTI add-on cover, the insurer will provide you coverage as per your insured declared value.

When you make a claim for return to invoice insurance under the total loss or theft scenario, the insurance company compensates for the below-mentioned values:

• Ex Showroom price + Registration Charges + Road tax, when you purchased the brand new car.
• Current replacement charges that include Ex-showroom price + Road tax + Registration charges.

How Much Does Return To Invoice Cost?

The price of RTI in car insurance varies based on the car model and age. Generally, RTI cost is 10 per cent higher than the premium for a standard comprehensive car insurance plan.

Example of RTI In Car Insurance

To understand what return to invoice means in car insurance, consider this example:

You purchased a brand new car worth Rs. 14 Lakh, and it got stolen after 2 years.

With the Return to Invoice Cover

If you had purchased a return to invoice in car insurance along with your comprehensive policy, you would receive the full original amount of Rs. 14 Lakh.

Without the Return to Invoice Cover

If you only had the standard comprehensive car insurance plan and didn't purchase the RTI return to invoice cover, you would receive the IDV of your car at that time- (~Rs. 11, 77, 000).

Hence, with the return to invoice insurance, you do not need to spend any amount from your pocket.

How to Opt for RTI in Car Insurance?

You can opt for return to invoice when you buy or renew a comprehensive car insurance plan. If you do not have a comprehensive policy, you can switch car insurance at the time of renewal. You can also end your active coverage and switch to a new insurer for immediate RTI insurance.

Validity of RTI in Car Insurance

The validity of the return to invoice cover in car insurance is generally 1 year. You have to renew RTI with your comprehensive car insurance plan before its expiry for continued coverage.

How to Claim Against RTI in Car Insurance?

To make a claim against your return to invoice cover in car insurance, here are the steps:

• In case of theft, get a stamped copy of the Police FIR, mentioning that the car is untraceable.
• In the event of damage to your car from fire, you can get feedback from an authorised garage to prove that your car is beyond repair.

IDV vs RTI in Car Insurance: Which is Better?

To determine whether RTI or IDV in car insurance is more beneficial, let's understand the differences between the two.

Have a look at the comparison of return to invoice (RTI) and Insured declared value (IDV) in car insurance below:

Now, consider the following situation:

You bought a car worth Rs. 16 Lakh and paid Rs. 2.5 Lakh for registration and road tax. After 2 years, your car's value will depreciate and the IDV will be around Rs. 10.39 Lakh.

Vehicle Theft or Total Loss

• Without RTI: Your insurer will only pay the IDV, which is Rs. 10.39 Lakh.
• With RTI: You receive the complete invoice value of your car, which is Rs. 16 Lakh.

Minor Repairs

• Return to invoice cover does not apply for small damages. Your standard policy coverage is applicable in case of minor damages if you have not purchased a zero depreciation add-on with your car insurance.

Therefore, for the highest level of protection against financial loss due to vehicle theft or total loss, return to Invoice insurance is more beneficial.

Who Should Opt for RTI in Car Insurance?

Return to invoice cover is ideal for:

• New Car Owners: It is highly beneficial to opt for RTI in car insurance if your car is new, i.e., under 3 years old.
• Luxury Car Owners: RTI insurance is ideal for high-end or luxury cars, because their depreciation is steep.
• Those Living in Risk-Prone Areas: You should opt for return to invoice cover if you live in an area that is accident-heavy, has a high vehicle theft rate, and is prone to floods.
• Loan Holders: RTI in car insurance is also ideal if you have an outstanding car loan. It will help you with loan repayment in case of vehicle theft or total loss.