Key Features of Return to Invoice Cover
Full Invoice Value Compensation:
- Total Loss Coverage: If the insured vehicle is stolen or suffers damage beyond repair (total loss), the insurance company will pay the full invoice value of the vehicle, including the original purchase price, registration costs, and road tax, rather than just the depreciated market value.
- Better Compensation: Without RTI cover, the policyholder would typically receive only the current market value of the vehicle, which is lower due to depreciation. RTI ensures that the policyholder recovers the full amount spent on purchasing the vehicle.
Applicable in Specific Scenarios:
- Theft: If the insured vehicle is stolen and not recovered.
- Total Loss: If the vehicle is damaged to the extent that the repair cost exceeds a certain percentage of the vehicle’s insured value, leading to it being declared a total loss.
Additional Benefits:
- Road Tax and Registration Fees: The cover also includes reimbursement of the road tax and registration fees paid at the time of purchasing the vehicle, ensuring that the policyholder is not out of pocket for these expenses.
- No Depreciation Deduction: The RTI cover negates the effect of depreciation, ensuring that the policyholder receives the full invoice value instead of the depreciated value.
Eligibility Criteria:
- Age of the Vehicle: RTI cover is usually available for new cars and can typically be availed for vehicles up to 3 years old, though this can vary by insurer.
- Limited Availability: The cover may not be available for older vehicles or those that have already been claimed under total loss or theft in the past.
Cost of Add-On:
- Premium Increase: Adding RTI cover to a motor insurance policy increases the overall premium, but it provides significant financial protection, especially for new or high-value vehicles.
When Should You Consider RTI Cover?
- New Vehicle Owners: RTI is especially beneficial for new car owners, as it ensures they do not suffer a significant financial loss due to depreciation.
- High-Risk Areas: If you live in an area with a higher risk of theft or accidents, RTI cover can provide added peace of mind.
- High-Value Vehicles: Owners of expensive cars may find RTI cover particularly valuable, as the difference between the market value and invoice value can be substantial
Example Scenario
Suppose you purchased a car for $20,000, including registration and taxes. After two years, the market value of the car has depreciated to $15,000. If your car is stolen or completely destroyed in an accident, a standard comprehensive policy would pay you only $15,000 (the current market value). However, with RTI cover, you would receive $20,000, covering the entire amount you originally spent.
In summary, Return to Invoice Cover is a valuable add-on for motor insurance that offers comprehensive financial protection, ensuring that you recover the full cost of your vehicle in case of a total loss or theft, without worrying about depreciation
