Return To Invoice Cover in Car Insurance

The Return to Invoice Cover provides protection in situations where the vehicle is stolen or damaged beyond repair. In such cases, the insurer has to pay the complete invoice value (ex-showroom price) of the vehicle to you. Not just that, the insurer will also pay you the road tax, the insurance charges, the registration charges that were made at the time of purchasing of the vehicle. Simply put, the insurer gives you back the complete amount that you paid for the car (when you bought it). 

For example: Rahul, a 28-year-old guy, got himself a Tata Nexon in July 2023. When Rahul got insurance for his car, he made sure to add the return to invoice feature. In just 2 months of getting the car, bad luck struck and his Nexon was stolen. Luckily, because he had the return to invoice cover, the insurance company paid him the full amount he paid for the car. Hence, he received back the invoice value as well as the registration charges, road tax charges and insurance cost. The important thing to remember is that this cover is only available as an add-on with a comprehensive insurance policy. It cannot be bought with a third party insurance. 

What all is included in this cover?

In case your car is completely damaged, the insurance company will compensate you in either of the following ways:

  • The cost of the new vehicle will be paid (up till the maximum price as mentioned in the invoice of the insured vehicle) with the similar make, model and specifications of the insured vehicle. 

OR

  • If the exact same model is discontinued, the insurance company will pay the amount equal to the last invoice value of the vehicle with the same make, model, features and specifications before it was discontinued (subject to maximum price as mentioned in the policy)

In addition to the above, you will also receive the following benefits:

  • Reimbursement of First-time registration charges which were incurred on the Insured Vehicle.
  • Reimbursement of Road Tax on the Insured Vehicle.
  • Reimbursement of new vehicle Insurance Policy which includes Own Damage Cover, Third Party Liability Cover and Add-On Cover (as availed in the Insurance Policy) provided you opt to insure the new vehicle, subject to maximum of premium paid under the existing insurance policy of the Insured Vehicle.
  • Reimbursement for any cost of accessories, including a bi-fuel kit, which were specifically insured in the car insurance policy, provided these are not factory fitted accessories of the new vehicle. 

There are certain important points  to be kept in mind while buying the cover. These are:

  1. No depreciation will be applicable at the time of making a claim under this cover. 
  2. Any compensation that will be paid under this cover by the insurance company will be the full and final settlement. 
  3. In case the vehicle is stolen, an FIR has to be filed and submitted but not before 90 days of the theft of the vehicle.

How does Return to Invoice Cover work?

According to any insurance policy, the maximum amount that can be claimed in the Insured Declared Value (IDV) of the vehicle which is calculated at the time of policy purchase. Even in case your vehicle is damaged or stolen, you will be paid back the IDV of the vehicle. The Return to Invoice Cover helps to bridge the gap between the IDV of the vehicle and the purchase price of the vehicle. The IDV is always lower than the purchase price because the depreciation is also included in the IDV. The difference in the IDV of the vehicle and the purchase price is due to depreciation, road tax, registration charges, insurance charger, all of which is compensated under the Return to Invoice Cover. 

For example: Let's say Mehul bought a car with a showroom price of  10,00,000. Apart from the showroom price he also pays Rs. 2,00,000 as road tax, registration charges etc. The IDV for a new four-wheeler is 95% of the showroom price, so the IDV for Mehul’s new car is 9,50,000. Now, Mehul’s car gets stolen. If he does not have the Return to Invoice cover, he will be paid back 9.5 lacs from his insurer. He still has to bear a loss of 2,50,000. Had Mehul purchased a Return to Invoice Cover at the time of policy purchase, he would not have to forgo the extra money he paid and he will be paid back the complete 12 lacs he invested in the purchase of a new car.. Isn’t it amazing? The grief of losing your car will be definitely less knowing that you will be reimbursed for the full amount you paid for the car. It does not account for any depreciation! But please note, it is only applicable in case your car is completely damaged or stolen. Even the Zero Depreciation cover sounds as a good option but it only pays back the ex-showroom price whereas the Return to Invoice cover pays you back the road tax, the registration fee and the insurance policy cost as well. 

When is the Return to Invoice Cover not applicable?

The cover is not applicable under the following circumstances:

  1. In case the damage to the vehicle is repairable
  2. If the vehicle is stolen but an FIR has not been filed. To file a claim, the policyholder needs to present relevant documents.
  3. If the age of the vehicle is above the fixed number of years, it varies from insurer to insurer. Most insurers don't provide this cover if the age is above 3-5 years. This is because paying the full 'On Road' price for an old vehicle could make the insurance company lose money. The cost could be more than what the car is worth now, especially if it's been used a lot and is worn out. Moreover, the insurer is obligated to pay you the full amount and there is no chance for loopholes.

How much Return To Invoice cost?

To avail the benefits of the add-on, the price of the policy will also go up. Usually, an extra 10% of the premium on comprehensive insurance policy will have to be paid in order to purchase the add-on.

Advantages of RTI:

  1. It makes your insurance policy even better by providing improved protection against complete damage or theft of your vehicle.
  2. 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. 

What is not covered under this cover?

The insurance company is not liable to compensate for the RTI claim under the following circumstances:

  1. If the Consolidated Total Loss or Total Loss of the vehicle is not valid under the Own Damage Component of the policy. 
  2.  If the non-built in electrical/electronic and non electrical/electronic components (including bi-fuel kit) form part of the invoice of the vehicle but are not insured under the ‘Own Damage’ component of the policy. 
  3. In case of theft, FIR has not been submitted to the insurer.
  4. If the insured vehicle is imported, then standard deductible will be applicable subject to terms and conditions of the policy.
  5. The add-on will not cover for any extended warranty incurred on the insured vehicle. 

How do I register a claim under the cover?

Step 1: In case of complete loss, firstly an authorized garage has to prove that your car is beyond repair. In case of theft, you have to wait for 90 days before filing an FIR. After the FIR is filed, you can start your application process.

Step 2: Upload/ Submit all relevant documents of your vehicle such as invoice value, registration certificate, proof of all expenses incurred at the time of purchase of the vehicle to your insurance company.

Step 3: The insurance company will take it up from there. You can follow-up with them from time to time to get an update on your application.

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