What is the difference between zero depreciation and RTI car insurance

Vehicle insurance is an essential step to protect your car from any unforeseen damages and loss. While a standard comprehensive insurance plan offers good coverage, add-on covers make the policy even more well-rounded and suited to your needs. When choosing a rider, two popular options that you may come across are Zero Depreciation and Return to Invoice (RTI). This article will explore the differences between the two add-ons.

What is a Zero Depreciation Add-On Cover?

Zero depreciation or NIL depreciation add-on cover eliminates the depreciation factor during claim settlement. Car parts are naturally prone to wear and tear, which reduces the claim amount payable over time. This means that in the event of an accident, the insurance provider will pay for the damage repair after deducting the depreciation cost for the vehicle parts. With zero depreciation cover, the policyholder can claim the full amount without any deductions, making it a beneficial add-on to four-wheeler insurance.

What is a Return to Invoice Add-On Cover?

Return to Invoice rider ensures that in case of total loss or theft of a car, the policyholder receives a claim amount equal to the original invoice value of the vehicle. Without this add-on, the insurance provider only pays the Insured Declared Value (IDV) of the vehicle, which will not be enough to cover the substantial loss of the four-wheeler. With a Return to Invoice add-on, the policyholder can claim the purchase value of the car. This will provide the much-needed financial cushioning in cases of vehicle theft, or the loss is irreversible.

Return to Invoice vs Zero Depreciation Cover: Differences

When is it Advisable to Choose The Zero Depreciation Add-On?

Zero depreciation is suitable for cars that are not older than 5 years. Some insurance providers offer this add-on for older vehicles as well. The number of claims can be limited by this cover, depending upon the insurer. The premium for four-wheeler insurance with zero depreciation add-on is higher.

  It is particularly beneficial for the following cases-

1. Recently Purchased Cars: It protects the car's value by covering full repair without any depreciation cost.
2. Frequent Commuters: Ideal for people who drive daily and have a higher chance of minor mishaps.
3. Urban Drivers: Driving in the city includes chances of minor accidents, making this a valuable add-on.
4. Luxury Vehicle Owners: Provides coverage for higher repair costs of premium parts.

When and Who Can Opt for the Return to Invoice Add-On?

Return to Invoice add-on is available for cars that are 1 to 3 years old, after which it is not provided. It is offered for vehicles that are repairable and can be used for more than 75% of its Insured Declared Value. The basic car insurance plan premium increases by 10% upon purchasing this add-on.

It is suitable for the following cases:

1. Expensive Cars: High-end or luxury car owners can benefit from a full invoice value claim.
2. Cars in High-Risk Areas: Regions that are prone to cases of theft or recurring natural calamities.
3. New Car Owners: Especially valuable for the first few years when the speed of depreciation is quick.

FAQs

1. Is Zero depreciation cover available for older cars?

Zero Depreciation add-on is available only for cars less than 5 years old.

2. Are there any deductions while claiming for a Return to Invoice Cover?

The claim amount received under RTI add-on insurance may not be equal to the total purchase value of the vehicle. The amount depends upon the terms of your insurance. Always consult your insurance provider while getting any add-on to your four-wheeler insurance.

3. Does RTI cover additional accessories?

No, RTI only covers the original purchase value of the car, excluding any accessories added later.

4. Is zero depreciation better than the RTI add-on?

Both add-ons are beneficial and are used for different purposes.

5. Is the on-road price of the car covered by RTI?

Yes, RTI covers charges such as road tax and registration cost of the vehicle.

6. Are there any exclusions under the RTI add-on?

Yes, RTI cannot be added to a third-party insurance policy as it is an extension of own-damage cover. Also, it does not apply after 3 years of car purchase. Minor damages are also not covered by RTI as it applies only to total loss.

7. Are insurance add-ons mandatory?

No, it is not necessary to opt for add-ons, but they can be chosen based on requirements, type of vehicle, and risk involved.

8. Can I buy zero depreciation and RTI add-on together?

Yes, several insurance providers allow you to purchase both add-ons at once as they serve different purposes.

Conclusion

In conclusion, Zero Depreciation and RTI car insurance both have their own set of benefits and drawbacks. Zero Depreciation insurance provides full coverage for the repair or replacement of damaged parts without considering depreciation. On the other hand, RTI insurance covers the cost of repair or replacement, along with the depreciated value of the vehicle.

The premium for Zero Depreciation insurance is higher compared to RTI insurance. It is best suited for newer vehicles with a higher value, whereas RTI insurance is more suitable for older vehicles with a lower value. Before choosing between the two, it's important to carefully evaluate your needs and budget. You can also consult with your insurance provider to find the best option for your specific circumstances.

Disclaimer: The information provided in this blog is for educational and informational purposes only. It may contain outdated data and information regarding the Insurance industry and products. It is advised to verify the currency and relevance of the data and information before taking any major steps. ICICI Lombard is not liable for any inaccuracies or consequences resulting from the use of this outdated information.