What Is Return To Invoice Cover In Car Insurance

Your car is like your baby. You want to look after it, protect is from every potential danger and nurture it for as long as you decide to keep it. In spite of so much security and protection, incidents on roads will happen. For all these unforeseen moments, you will be glad that you a solid car insurance policy to back you up.

That said, what do you do in a scenario where your beloved car is damaged beyond repair or it is stolen?

Don’t lose hope right away as you, fortunately, have Return of Invoice or better known as RTI as an add-on cover.

RTI is offered as part of a comprehensive car insurance plan. This can only be availed by vehicles that are new or are less than five years old. If the car is stolen or suffers irreparable damage, the insured customer has the right to claim full compensation. However, this will only be up to the last complete invoice value of the car.

How is RTI Different From IDV?

Under usual circumstances, your maximum claim is limited to the IDV of the vehicle. On the other hand, RTI is a top-up option that can be used to cover the difference between Insured Declared Value and the Invoice Value of the vehicle.

To put things into perspective, due to the annual depreciation of your car, IDV will always be less than the invoice value of your vehicle. With an RTI option in place, you can get the current on-road price. That means, even if there has been depreciation, it does not apply to you.

When Is RTI Applicable?

Having the RTI option is an investment that can help in safeguarding your back especially in situations where the financial liabilities are high. By bridging the gap between the vehicle and its Insured Declared Value and the actual invoice value, you are liable to be reimbursed for the total ‘On Road’ price of the vehicle that you paid when you purchased it.

Generally, the RTI cost is approximately 10% more of a comprehensive car insurance plan.

Remember that insurance providers offer RTI as an add-on for vehicles until they reach an age limit that has been predefined before.

The Return to Invoice option is not applicable in all situations. So, when you have a dent in your car or it needs repairing, or if your windshield has a crack on it, you do not need to bank on RTI for compensation. Own Damage Cover or other add-ons like Zero Depreciation can handle these partial losses.

RTI should only be used to recover substantial financial loss as a result of irreparable car damage or if there has been a case of theft where the vehicle is no longer recoverable.

How Do You Calculate RTI?

You will be paying the ‘On Road’ price when you opt to buy a new car. This typically comprises of the Ex-Showroom Price Plus the Road Tax. Plus, you are also liable to pay Registration Charges, the amount of which is determined by the make or class of your car. Add everything together and you end up with an IDV figure which is less than what you initially paid.

Having an RTI as an additional cover ensures that your IDV is the same as the ‘On Road’ price that you paid. What this translates into is that if your car is stolen or damaged beyond repair, you can claim the original price as compensation that you paid for the car at the time of purchase.

On the other hand, if you choose to raise the claim under Total Loss / Constructive Total Loss or Total Theft of your car insurance plan, the insurer will compensate you with a the lower of any one of these two values:

• Ex-showroom price+Road tax+Registration charges at the time of purchase
• In case the same model is available then - the present replacement price of the vehicle which would be -> Ex-showroom price+Road tax+ Registration charges

What Are the Advantages of The RTI Add-On?

Having the RTI option is an investment that can help in safeguarding your back especially in situations where the financial liabilities are high. By bridging the gap between the vehicle and its Insured Declared Value and the actual invoice value, you are liable to be reimbursed for the total ‘On Road’ price of the vehicle that you paid when you purchased it.

Generally, the RTI cost is approximately 10% more of a comprehensive car insurance plan. Remember that insurance providers offer RTI as an add-on for vehicles until they reach an age limit that has been predefined before.

It’s Not for the Lifetime

Since the add-on comes with a limited shelf life, you cannot bank on it forever. Usually, after some of your policy renewals in the first few years, your insurance provider will withdraw this benefit. This is because paying the ‘On Road’ price for an aged vehicle will convert into a financial loss of the insurance provider. The value will, of course, be more than the current market price of the car especially if the vehicle has experienced significant wears and tears over the years.

That said, when you do raise a claim with RTI, the insurer is legally bound to pay the invoice cover in full. There are really no loopholes for evasion of any one of the charges, including one-road price, registration costs, road tax, dealer’s handling etc. that can be bypassed in any way.

They may also offer compensation of a specific amount which is in exclusion of the car’s showroom price as mentioned in the original invoice.

In Conclusion

Return to Invoice is a part of your car insurance cover that plays a key role in saving you from paying a massively depreciated amount. Instead, you get the car’s full value, sometimes, even more.