Understanding the New Safety Net for Your Vehicle’s Value
Return to Invoice Insurance is becoming a game changer for vehicle owners in India. In an industry where depreciation often leaves insureds out of pocket after a claim, RTI promises to cover the original purchase price of your vehicle. This is something that standard insurance policies usually do not provide. This is recently gaining traction as a must-have addition to motor insurance plans with the recent regulatory updates and rising vehicle costs.
But What is Return to Invoice Insurance?
Return to Invoice Insurance is a motor insurance add-on that is designed to protect vehicle owners against the loss which has incurred due to depreciation. In case of theft or damage to the vehicle, the insurance company pays you the market value of it, which is lesser than the original price which you had paid. However, with RTI, the insurer has to pay the full invoice value of your vehicle in such cases. This includes the ex-showroom price and additional costs such as road tax, registration charges, and insurance premiums— all of which you had paid at the time of the purchase.
This means that if your vehicle is damaged beyond repair or stolen, you can get a reimbursement equal to what you had actually paid to buy it, rather than the depreciated value.
What’s Driving the Popularity of RTI Insurance in India?
While RTI is not new, in recent years its popularity has surged because:
Rising Vehicle prices: In today’s market, cars are more expensive than ever. This makes the initial payment much larger, and the potential financial loss from a total loss is eve more significant. Car owners are becoming more aware of the need to protect this substantial investment completely. With the increasing cost of the cars, the financial risk associated with losing a vehicle has become substantial. A standard policy’s depreciated payout often leaves a large gap that the owner must cover-out-of-pocket to buy a replacement.
Rapid Depreciation: A car’s value depreciates rapidly, especially in the first few years. RTI Investment however, completely nullifies this financial impact, ensuring your investment is protected from the moment you drive it home.
Enhanced Financial Security: Many people purchase a car through a loan. And, in the event of a total loss, a standard insurance payout might not be enough to clear the outstanding loan amount. This leaves the owner with the burden of paying for a vehicle they do not even posses anymore. RTI however, ensures that you can settle your loan and still have enough in your pocket, to buy a new car.
How does Return to Invoice Insurance work?
Opting for RTI coverage is a straightforward process. When you purchase a new comprehensive motor insurance policy, you can select the “Return to Invoice” add-on for a small additional premium. This add-on is usually available for vehicles up to a certain age, which varies by insurer.
If you choose RTI insurance as a rider or add-on to your standard motor insurance policy, here’s what happens:
- When you buy your vehicle insurance, you opt for RTI coverage by paying an additional premium, typically between 10-15% of the basic premium. It depends upon the insurer and vehicle type.
- If your vehicle is stolen or declared a total loss due to an accident, you can choose to file a claim with your insurer.
- Instead of calculating compensation based on the current market value (which factors in depreciation), the insurer will reimburse the full invoice value of your vehicle as per the original purchase invoice.
- This settlement includes ex-showroom price plus road tax, registration charges, and insurance cost paid at the time of purchase, ensuring you don’t lose out financially.
Is RTI Right for You? Here’s How to Decide
There are several benefits that make RTI attractive:
Superior Financial Protection: The primary advantage is the robust financial shield it provides. By covering the full invoice price, it ensures you are not left to bear the burden of depreciation out of your own pocket.
Peace of Mind: By knowing that you can be protected from a potential financial loss in case of damage, loss or theft of your beloved vehicle, you can be at ease. It allows you too drive without tension of the depreciating value.
Simplified Replacement: With the full invoice amount in hand, you can easily replace stolen or damaged vehicle with a new one of the same make and model, without having to arrange for any additional fund.
Things You Should Know Before Opting for RTI Insurance:
- It is only available for new or fairly new vehicles: most insurers offer RTI only for vehicles that are less than 3 to 5 years After this, the depreciation value is considered to be too steep.
- You will be required to pay a higher premium: Since RTI is an add-on cover, you should be expecting for the premium to go up by 10 to 15%. However, it is worth it because of the protection it offers.
- It is only valid on case of total loss or theft: You should know that RTI will not help you if your damaged car can be repaired. In that case, regular insurance and zero depreciation cover may work.
- Coverage details vary: Not all insurers include the same components like road tax or insurance premium, in the final payout. You should always consider checking the policy wording or speak to your advisor.
Knowing all of this, who should consider getting RTI insurance?
- New vehicle owners, especially the ones in their first three years.
- High-end vehicle buyers can consider it as even small depreciation losses can mean huge financial burdens.
- People living in areas with higher accident or theft rates,
- First-time buyers can consider it to avoid the risks associated with major financial investments.
Need a loan for a car? Know more
In 2024, the IRDAI had introduced new norms that made insurance products more transparent and customer-friendly. Add-ons like RTI are now clearly explained in policy documents, and insurers are expected to ensure smoother claims.
The regulator has also urged the providers to streamline RTI claim processes which makes it faster and easier for buyers to get the full value during settlements. This push has made RTI more accessible than ever, even for two-wheeler owners, which was rare until recently.
Conclusion: Is RTI the Future of Car Insurance in India?
The motor insurance landscape in India is evolving, with customers becoming more informed and seeking better protection for their high-value assets. The rise of RTI insurance is a testament to this shift. It addresses a critical flaw in standard policies, offering a way to safeguard your investment from the inevitable impact of depreciation.
In a world of increasing financial risks, RTI insurance is a powerful tool which offers a practical and effective way to protect your car and finances, It is more than just an add-on or a trend; it is a necessity.
Before you finalise your motor insurance policy, you should take the time to evaluate if an RTI add-on is the right choice for you. This small additional premium could potentially be the most valuable investment you make. It will ultimately ensure that in the face of adversity, you are financially prepared to get back on the rad with a new vehicle.
