Summary/TL;DR:
Comprehensive car insurance has several add-on covers. Two of the most important ones are the zero depreciation and return to invoice covers. They offer financial protection when your car is damaged or stolen.
Introduction:
Buying a car is extremely exciting. However, it can get a bit confusing, too. There are too many terms, too many add-ons and at times, too many assumptions! Everyone knows that getting car insurance is crucial. But how do you select the perfect plan with the perfect coverage? For that, you need to know how to customise your car insurance plan. Adding riders such as the zero depreciation riders and return to invoice riders helps. But what exactly are these covers? Read on to know more.
What is zero depreciation in car insurance?
Over time, your car depreciates. In other words, its value decreases every year. When you make an insurance claim, the depreciation is deducted. Hence, your car insurance claim is smaller in value.
Let us understand this with an example. Rahul has a 2-year-old Maruti Ertiga. While driving on the highway, a rock hits the windscreen, and it cracks badly. He sends the car for repair. The cost of the new windscreen is INR 18,000. However, since his car is 2 years old, a depreciation of 10% is applicable, and Rahul gets an insurance payout of INR (18,000 - 1,800) 16,200.
The zero depreciation add-on cover protects you from this. With the zero depreciation rider in place, the depreciation amount is not considered, and you get the full claim amount at all times. This is how zero depreciation car insurance works.
What is Return to Invoice (RTI) cover?
The return to invoice cover is a car insurance rider. Here, you are paid the vehicle’s original purchase price (including registration and road tax) in case of total loss or theft. The depreciation value is not considered, and you get the exact purchase value. This helps you to replace the vehicle and get a new one effortlessly.
What are the main differences between zero depreciation and RTI?
To understand the main differences, let us look at the table below:
What are the most common misconceptions about zero depreciation and RTI?
Here's a look at some of the most common misconceptions regarding the zero depreciation and RTI covers:
1. Zero depreciation covers total loss
No, the zero depreciation add-on cover does not come in handy when you lose your car. The insurance provider will pay out the compensation after deducting the depreciation value if you only have a zero depreciation rider.
2. RTI helps in small claims
The return to invoice cover does not help in small claims. It has only one purpose - to pay you the invoice value of the vehicle once it is stolen or damaged beyond repair.
3. Both are the same
Absolutely not! As you saw in the points above, the zero depreciation cover and the return to invoice cover have different roles and come in handy at different times.
The final word
Everyone has different needs regarding motor insurance. When you choose your coverage, keep your requirements in mind. See what kind of coverage you need, depending on the type of vehicle you have and how you use it. You may need only the zero depreciation cover. Conversely, you may only need the RTI cover. You may even need both. Analyse your needs properly and choose the best policy from a good insurance provider like Generali Central, and keep your car adequately protected.
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.
FAQs
The zero depreciation rider is usually available for cars that are up to five years old. If you have a vehicle that was purchased beyond that, you may not be eligible for this rider.
In most cases, no. The RTI cover is usually given to new cars. This is because the value of a car depreciates with time. The insurance company may not want to pay the original invoice amount when the car has severely depreciated in value.
No, it is not compulsory to get any rider. You can simply get the basic comprehensive insurance plan and keep your vehicle protected. The zero depreciation and RTI are add-on covers. They are completely optional.
