RTI usually covers the ex-showroom price, the registration cost, and the road tax. So, if you are to replace your vehicle after losing it, the claim amount will be sufficient to get a similar model.
Do I really need the RTI cover?
Like all car insurance riders, the return to invoice cover also works in specific scenarios. When you buy car insurance online, you must assess your requirements to see whether you need this add-on or not. You would benefit from this cover if:
1. New car owners
A new car has the highest value, but the depreciation kicks in as soon as you leave the showroom. If, unfortunately, anything happens to your car and you have to replace it, you should get the full invoice amount so that you can effortlessly replace the vehicle.
2. Expensive car owners
If you have an expensive, imported car, an RTI along with the standard car insurance plan may be a great idea. Even a small percentage of depreciation makes a lot of difference to the overall value of the vehicle. So, if you need to have it replaced, the RTO comes in very handy.
3. People living in flood or theft-prone areas
The place where you live plays an important role. If you live in a coastal area or a low-lying area where cyclones or floods regularly cause havoc, you must invest in the RTI add-on cover. Similarly, if you reside in a theft-prone area or if you are forced to park on the street, an RTI add-on would be beneficial for you.
4. People with long-term car loans
If you have a long-term loan, you may get a return to invoice cover with your motor insurance plan. If you are halfway into the loan, and something happens to your car, you will only get a partial claim amount, which may not be enough to pay off the loan or get a new car.
Read More: Add-On Covers in Car Insurance
When should I avoid getting the RTI cover?
You may not need a return to invoice cover if:
1. Your car is old
Older cars depreciate in value. You do not get a lot of money if you sell the car. So, it is not always the best idea to get an RTI cover for an old, deprecated car.
2. The market value is already low
If you have an older model which no longer has a high market value, you may not need the added RTI cover. For such a vehicle, a standard comprehensive motor insurance plan would suffice.
3. You wish to pay lower premiums
If you have a fixed budget and cannot afford to overspend, you should not get the RTI cover. Just keep your vehicle in a safe place, and drive carefully to minimise the risk of complete loss.
Read More: Is Return to Invoice Cover Worth It in Car Insurance
To wrap it up
The main difference between RTI and standard insurance settlement lies in how the insurer calculates the claim amount after a total loss. While the standard settlement pays the depreciated value (IDV) of the vehicle, RTI aims to restore the original invoice value. If you own a relatively new car, especially an expensive model, RTI would work well for you. However, if you have an older car, a standard comprehensive policy may be sufficient and more cost-effective in the long-run.
Expert Note
This information is based on standard motor insurance guidelines issued by the Insurance Regulatory and Development Authority of India (IRDAI) and commonly followed industry practices. Policy coverage and conditions may vary by insurer.
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