RTI vs IDV in Commercial Vehicle Insurance

What is RTI in Commercial Vehicle Insurance?

RTI, or Return to Invoice, is an add-on cover with commercial vehicle insurance. It helps policyholders recover the original invoice value of the insured commercial vehicle in the event it is stolen or damaged beyond repair (i.e., more than 75% of its current market value).

With the RTI add-on cover for a commercial vehicle, the insurance company is liable to compensate the full amount, rather than the depreciated value (IDV). RTI helps to recover the exact amount paid when purchasing the vehicle, including road tax and registration charges (as per insurer terms).

RTI is only applicable when the insured vehicle is totally damaged or stolen. Policyholders can only opt for this add-on with a comprehensive policy at an additional premium. The RTI add-on includes the following:

• Ex-showroom Price
• Road Tax
• Registration Charges
• First Insurance Cost

RTI vs IDV in Commercial Vehicle Insurance

The table below highlights the key differences between RTI and IDV for a commercial vehicle:

How is IDV Calculated for Commercial Vehicles?

IDV is the current market value of an insured commercial vehicle. Considering this, IDV for a commercial vehicle can be calculated using the formula:

IDV = Manufacturer's Listed Selling Price - Depreciation

*If there are any accessories not included in the listed price, their value is added separately after applying depreciation.

You can use the following table to know the depreciation based on the age of the vehicle:

Importance of IDV in Commercial Vehicle Insurance

IDV directly affects both your premium and claim payout. Choosing an accurate IDV helps maintain a balance between cost-effectiveness and adequate coverage. Here is why setting the right iDV is important for a commercial vehicle insurance policy:

• Fair Claim Settlement: You receive the right market value during total loss or theft.
• Accurate Premium: Setting the correct IDV helps in determining the correct premium. A high IDV can increase the premium, whereas a low IDV results in an inaccurate and low compensation.
• Accurate Vehicle Valuation: Setting the correct IDV also ensures your vehicle is neither over-insured nor under-insured.
• Better Financial Protection: Since commercial vehicles are expensive goods and passenger-carrying vehicles, setting the correct IDV helps to reduce any out-of-pocket expenses of the policyholder.

Conclusion

RTI and IDV serve different purposes in commercial vehicle insurance. While IDV is the depreciated market value of the commercial vehicle, RTI ensures a fair compensation that is equal to or close to the original invoice value. Understanding both helps you select the right coverage, minimise financial losses, and keep your commercial vehicle fully protected.

For example, the insured commercial vehicle was purchased for ₹22 lakh (including taxes and registration costs). After two years, its IDV may reduce to ₹16-17 lakh as per the depreciation (approximately 20%). If the vehicle gets stolen or is totally damaged, the insurer is liable to reimburse only ₹16-17 lakh without the RTI add-on, but the full invoice amount of ₹22 lakh with the RTI add-on for commercial vehicles.