Return to Invoice (RTI) add-on cover in India is typically valid for cars up to 3 to 5 years old, with many insurers specifically limiting it to vehicles under 3 years old. It covers total loss or theft, providing the original invoice value (including registration and taxes) rather than the depreciated value.
The return on invoice option is suspended after three years since cars older than 3 years would typically have a substantial amount of wear and tear. This factor cannot be ignored by insurance providers if an RTI claim is made and the insurer would have to book a loss for offering this facility.
RTI is an add-on cover offered with 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 equal to the invoice value of the car.
It gives the ultimate protection to your wallet since your insurer will pay you the invoice value in case your vehicle is stolen or damaged and you don't even have to worry about the depreciation.
While there are no specific IRDAI guidelines for zero depreciation, zero dep insurance after 5 years is not applicable. The value of a car decreases over time at different rates, depending on its parts and age.
Consider buying bumper-to-bumper insurance for used cars up to 5 years old to protect against expensive repairs without depreciation deductions. However, the car's overall age must be below 5 years to be applicable. You cannot buy bumper-to-bumper insurance after 5 years.
An NCB of 5 or more years can for example enable the car owners to receive a 60-75% discount on their car insurance premiums.
Generally, the Return to Invoice cover remains valid until your base policy expires.
Despite its benefits, zero depreciation of car insurance also has some limitations:
The IDV, which represents the maximum amount your insurer will pay in case of total loss or theft, is fixed at the beginning of the policy term. However, you typically have the opportunity to adjust the IDV at the time of policy renewal.
GAP (Guaranteed Asset Protection) Insurance is when you receive the difference between the insurance pay-out to you and the cost of your finance settlement. RTI (Return to Invoice) Insurance is the difference between the pay-out received and the price you paid for the original purchase price of the vehicle.
It fetches you the complete amount of loss when you raise a claim for an accident causing a total loss. This add-on is available at an additional cost, usually 10% more than comprehensive car insurance.
What are the Principles of Insurance? The principles of insurance include seven key concepts: insurable interest, utmost good faith, proximate cause, indemnity, subrogation, contribution, and loss minimisation.
This surrender value is mentioned in the policy and is often paid after the completion of the 3 years of policy. The insurance company will pay a surrender value of 30% of the premium paid towards the life insurance, excluding the premium paid in the first year.
RTI coverage comes with certain limitations: Available only for vehicles less than 3-5 years old (varies by insurer) Cannot be purchased as a standalone policy. Subject to specific terms and conditions regarding claim eligibility.
High-end car owners. If you bought an expensive or luxurious car, a zero dep car insurance will benefit you. The cost of the car parts of an expensive car is usually high. A zero dep insurance ensures you get complete coverage against any damages to these car parts.
Differences Zero Depreciation vs Return To Invoice
Zero depreciation cover allows easier claim settlement without considering the depreciated value of a bike. Return to invoice cover provides the insured with a lump-sum claim amount based on IDV in case the bike is stolen or damaged beyond repair.
You can make 2 claims in a policy year under zero depreciation cover. There's no limit on the number of claims you can make under this policy during your policy period. Under zero depreciation add-on, you don't need to pay the depreciation costs while filing the claim.
RTI (Ramp Travel Index):
Formula: RTI = (Travel Distance ÷ Wheelbase) × 1000.
How does no claims discount work? For each year you don't claim on your car insurance policy, you'll earn one year's worth of no claims discount. Usually, the more years you go without a claim – the bigger your discount will be when you renew.
If you own multiple private cars, you can have multiple NCD. If you sell your old vehicle and decide to purchase a new one, the NCD from the old vehicle can be transferred to the new vehicle. If, however, you do not acquire a new vehicle and your NCD remains unused after one year, it will be reversed.
No Claim Bonus or NCB is a reward given by an insurance company to an insured for not raising any claim requests during a policy year. The NCB is a discount ranging between 20%-50% and is given to the insured while renewing a policy. The NCB discount is offered on the premium amount during renewal.