5 min read
Updated on Jul 13, 2022
Have you bought a new car? In that case, you must know about the return to invoice cover as it can prove to be handy for you.
As you would know already, car insurance add-ons are supposed to provide you additional financial protection against damages suffered by your car or loss of the same owing to causes such as thefts, accidents, and mishaps of all other nature. These days, you can get various kinds of add-ons by paying some extra money for them. These add-ons are available only with comprehensive and standalone car insurance policies. You have various add-ons that offer different kinds of protection.
Do you want to know what return to invoice in car insurance is? Well, this basically offers you invoice protection. It is also referred to as invoice protection cover.
As we have said already, this is an add-on cover. With the help of this add-on, you would get a claim amount that is equivalent to the cost of the car that was mentioned in the invoice when you bought it. This basically bridges the gap that exists between the IDV (insurance declared value) of the car and the invoice value of the same.
So, with the RTI insurance add-on, you would get the on-road price that you had paid for the car when you bought it. This would help you in case the car is totaled. However, please remember that this coverage would only be applicable if your car is damaged to such an extent that it cannot be used any longer. It would not help you in case your vehicle sustains only minor damages.
There are certain circumstances where you can make a claim on your car insurance policy. This could be ranging from the theft of your vehicle to broken headlights.
As we have said already, RTI in car insurance means that you get the money that is mentioned in the invoice of the same. There are certain situations in which your car cannot be used any longer. It could be because of unfortunate events such as fires and theft of the vehicle. In these cases, the insurers normally pay an amount that is equal to the IDV of the car or pretty close to the same. This is normally lesser than the price of the car as mentioned in the invoice – the one for which you bought the car.
In this context, it is also important to understand the concept of return to invoice vs. zero depreciation. If you have RTI coverage in your car insurance you would be eligible to receive the value of the car as mentioned in the invoice, rather than the IDV. This is however applicable only in cases like ones where your car has been totaled. The invoice value of the car also includes the registration charges of your car and the road tax you paid for the same along with its market price at that point in time.
Let us say that you bought a car for 520,000 rupees. Here you paid 15,000 as the road tax of the vehicle and 5000 for registering the car in your name. This would imply that the selling price of the car is 500,000 rupees.
In case you have a standard standalone own-damage or comprehensive policy you would get only 500,000 rupees if your car is stolen or damaged totally beyond repair. This is however the maximum amount that you can get in these cases though as the insurers would be deducting the depreciation from the same.
There are some crucial points that you need to know about the return to invoice cover before you go for the same as such. Usually, you can purchase this add-on if your car is not older than three years. Normally, these add-ons cost around 10% more than the normal standalone own-damage and comprehensive car insurance plans.
The return to invoice cover is suitable for people who have a new car as well as ones whose cars are costly. The same is also applicable to people who own cars and live in areas where a lot of thefts happen.
The first benefit of return to invoice cover is that it is suitable for people who own new cars. This helps them get adequate compensation in case their car is stolen or damaged in such a bad way that it cannot be repaired. Do you live in an area where two-wheelers and cars are stolen pretty often? In that case, you must get such coverage for your car. This will make sure that you are at least financially protected in these cases. You can be sure that the compensation that you get from a normal car insurance policy would always be lower than what you get in these cases.
The return to invoice cover is valid only for new cars. So, if your car is older than five years such coverage would not be appropriate. Has your car suffered any damage that can be repaired? In that case, such coverage would not be applicable. As we have said already, such coverage is only applicable in cases where the car has either been stolen or totaled. If you have not filed an FIR (first information report) for the car or if it has been damaged completely in an accident such coverage would not be applicable.
If you want to get complete compensation for your stolen or damaged car without losing the tax and registration charges that you have paid for the same you need to get the return to invoice cover that we are talking about over here. As you already know, with such protection you get coverage for the on-road price that you have paid for the car. If you have bought a costly or new car such coverage would be indispensable for you.
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