Return to Invoice in Car Insurance

When you buy a comprehensive car insurance policy, you get coverage for third-party liabilities and damages to your car due to an accident, man-made disaster, natural calamity, fire, collision, or theft.

In other words, these policies are designed to offer the maximum coverage for a fixed premium. However, comprehensive policies have certain terms, limits, and exclusions too.

For example, If the insured car is stolen and the police declare it non-traceable, then you can file a claim with the insurance company. As per the usual terms of a comprehensive plan, the insurer pays the sum insured as compensation in such cases. However, the claim amount is calculated after deducting depreciation.

Return to Invoice or RTI in car insurance is an add-on cover that allows you to receive the invoice value of the car without any deduction.

The Insurance Regulatory and Development Authority of India (IRDAI) determines the depreciation rates for all vehicles in the country. Here are the rates:

Age of Your Car	Percentage of Depreciation
0 to 6 months	0.05
6 months to 1 year	0.15
1 year to 2 years	0.2
2 years to 3 years	0.3
3 years to 4 years	0.4
4 years to 5 years	0.5

This means that if your car is, say, 2-3 years old and is stolen or damaged beyond repair, then the insurer will deduct 30% of your claim amount before processing it to you.

If you have purchased a Return to Invoice car insurance cover, then there will be no deduction, and you will receive the invoice value of the car as the claim settlement amount. It also includes the additional costs incurred while buying the car.

When you buy a car, you pay something called the on-road price of the vehicle. This includes the ex-showroom price of the car, registration charges, and road tax. With the RTI cover, you get the following claim settlement:

Claim Amount (with RTI) = Ex-showroom price + Registration Charges + Road Tax

The RTI cover in car insurance is useful only in the event of a total loss. This means that you can use this add-on only under two circumstances:

The insured car meets with an accident or mishap and is damaged beyond repair.

The insured car is stolen and police have deemed it non-traceable.

Remember, you cannot use this cover for minor repairs.

Most insurers do not offer the Return to Invoice add-on to cars after around three years. While this can vary, make sure to check with your insurer before buying.

This is because, over time, the car undergoes wear and tear, and its market value decreases significantly. Hence, it is not feasible for the insurer to pay you the invoice value once the car gets old.

Every car insurance company has a generic set of inclusions and exclusions where a car insurance claim will be accepted. For the Return to Invoice cover to come into play, the claim needs to be within the agreed terms of the policy. Here is a quick look at the inclusion and exclusion list for TATA AIG car insurance policies:

Inclusions	Exclusions
Accidental damage to the insured vehicle	Wear and tear
Theft of the insured vehicle	Mechanical or electrical breakdown
Third-party liability coverage	Damage due to driving under the influence of drugs/alcohol
Personal accident cover for owner-driver	Damage while driving without a valid license
Coverage against natural calamities	Damage outside the geographical area of coverage
Fire damage	Damage due to war or nuclear risks
Coverage against man-made disasters	Depreciation of vehicle value
Towing assistance and roadside support	Damage to accessories beyond a certain limit
No Claim Bonus (NCB) benefits	Damages when driving outside specified conditions
Personal belongings cover	Deliberate damage by the insured

Also, if you are claiming compensation for total loss due to the car being stolen, you need to submit the final report of the police that confirms the theft of the vehicle for the claim to be processed.

You can opt for a return to invoice cover under the following circumstances:

With an Active Comprehensive Plan:

If you hold a comprehensive car insurance plan , you can easily add return to invoice coverage when renewing your policy.

Without an Active Comprehensive Plan:

If you do not already have comprehensive coverage, you have the option to switch your policy during car insurance renewal to include a return to invoice cover.

Alternatively, you can choose to terminate your existing plan and switch to a new policy offering return to invoice cover immediately.

Tata AIG approves RTI claims by comparing two values:

The invoiced car price, encompassing the ex-showroom price, road tax and purchase restoration fees.

The car replacement price, which is considered the ex-showroom price, registration expenses and applicable road taxes.

The sanctioned claim amount for cars with the return to invoice add-on is determined as the lesser of these two figures.

The RTI cost fluctuates based on the car model and its age. Tata AIG provides convenient calculators to help you gauge the cost-effectiveness of this option.

Generally, the premium for return-to-invoice coverage is approximately 10% higher than that of comprehensive coverage without RTI.

Here are a few RTI examples that will help you understand the concept of return to invoice in car insurance a little better:

Aditi purchased a brand new sedan valued at ₹20 Lakhs. Living in a flood-prone area, her car was swept away in a flood just 2 years after her purchase. All efforts to locate it proved futile.

Case 1:

Aditi had wisely opted for RTI cover along with a comprehensive car insurance policy. Therefore, when her car was lost, she filed a claim and received the full invoice amount of ₹ 20 lakhs. With this compensation, she was able to purchase a new vehicle without bearing any financial burden.

Case 2:

Aditi has only opted for comprehensive car insurance without an RTI cover. The claim settlement process will hence be different. In this case, the Insured Declared Value (IDV) after deductions would amount to ₹16 Lakhs.

Hence, Aditi would only receive ₹16 lakhs as compensation. This may not be sufficient to purchase a new vehicle of the same value.

These examples illustrate the significant difference RTI covers can make in car insurance. With RTI insurance, you are protected from financial loss as you are eligible to receive the full invoice amount in case of total loss or theft of the insured vehicle.

Return to Invoice (RTI) and Insured Declared Value (IDV) both serve distinct purposes in car insurance coverage. Here is a comparison of IDV vs RTI:

" " " " " "

Return to invoice	Insured Declared Value
RTI is an additional add-on cover available in car insurance policies.	IDV is an integral part of the base plan of a car insurance policy
RTI car insurance coverage requires an extra premium payment for inclusion in the policy.	IDV is included in the base premium of the car insurance policy and requires no additional payment.
With RTI, you receive the original invoice amount of the car in the event of a total loss due to accidents or theft	IDV represents the agreed value between you and your insurer, which is determined at the policy’s initiation. This value may not necessarily match the original invoice amount of the vehicle.
RTI cover needs to be renewed alongside the comprehensive car insurance plan	IDV is automatically renewed with the car insurance policy.

Parameter	Zero Dep Cover	RTI Add-on
Meaning	Zero depreciation Cover ensures that your claims are settled without factoring in depreciation on vehicle parts.	The RTI add-on cover applies when the car is irreparably damaged or stolen.
How Does it Work?	With Zero depreciation Cover, you receive the full claim amount without any depreciation deduction.	The RTI add-on cover fills the gap between the IDV and the car's invoice value during claim settlement.
Premium	The Premium for Zero Depreciation Cover is typically 15%-20% higher standard premium amount.	The RTI add-on premium is usually 10% higher than that of comprehensive coverage.
Example	Avni’s car was in an accident and needed repairs. Thanks to the zero dep cover, she got the total claim amount without any  depreciation deduction.	Aditi’s car was stolen, and with RTI, she received reimbursement based on the car’s purchase value.

RTI cover is exclusively available for new cars, with cars up to three years old eligible for the benefits it provides.

An add-on RTI cover means it is not included in the basic plan of the car insurance.

To buy RTI, you must have a comprehensive car insurance plan. This add-on is not compatible with a third-party car insurance policy.

RTI cover renewal must be initiated annually, along with comprehensive premium renewal. The cost will depend on the car’s last or latest invoiced value.

RTI cover provides complete reimbursement based on the invoice amount. This ensures you receive the total amount as per the invoice.

RTI cover applies only to total loss and theft scenarios and does not extend to damage resulting from road incidents.

While you will be required to pay an additional premium amount to buy RTI in motor insurance, its impact on the claim amount justifies this cost. You can use TATA AIG’s free online car insurance calculator to assess the impact of the add-on cover on the premium amount and make changes to the policy to get it to match your budget and requirements.

Remember, insurance for four-wheelers is essential to avoid unnecessary expenses in the event of an accident or mishap. Choose add-on covers to your car insurance based on your needs and try different combinations to find the best protection for your car.