Return to Invoice Protection Cover: Is It Worth the Extra Premium?

When you purchase car insurance, the policy comes with multiple add-ons that can be availed for a little extra premium. With these add-on covers, you can get enhanced protection for your car. One of the most common add-ons available to a car insurer is the Return to Invoice (RTI) cover. If a car is stolen or is beyond repair, this policy add-on enables the car owner to receive compensation that equals the full original invoice value of the car.

Is the return to invoice cover worth adding to your car insurance policy? This comprehensive guide explores all RTI cover benefits and helps you decide if they are worth the extra premium.

What is Return to Invoice Protection Cover?

Return to Invoice (RTI) cover is a specialized add-on feature available with comprehensive car insurance policies. Standard motor insurance compensates based on the depreciated value of your vehicle. RTI cover, however, ensures you receive the full invoice value of your car in case of theft or total loss. This means the insurance company will pay the original purchase price of your vehicle as stated in the invoice, regardless of its depreciated value at the time of the incident. For car owners concerned about financial protection, adding return to invoice cover to their car insurance policy provides an extra layer of security.

How Does Return to Invoice Cover Work?

When you buy vehicle insurance with RTI cover, you are protecting yourself against the significant financial losses you may have to incur in case of total loss or theft, as well as the value depreciation losses. Here is how it works:

• In case of a total loss (where repair costs exceed 75% of the car's value) or theft, you file a claim with your insurance provider
• Instead of receiving the Insured Declared Value (IDV), which is the depreciated value of your car, the insurer compensates you with the original invoice value of the vehicle
• Many RTI covers also include compensation for the registration charges and road tax you paid when purchasing the vehicle
• This ensures you have sufficient funds to purchase a similar new car without bearing extra out-of-pocket costs

The return to invoice cover means complete reimbursement for any car owner without any losses associated with depreciation. This makes it particularly valuable for newer vehicles where the net loss would be substantial.

Benefits of RTI Cover in Car Insurance

By adding the Return to Invoice cover to your motor insurance, you will sign up for several significant advantages.

• Full Invoice Value Compensation: You get reimbursed for the original purchase price of your vehicle rather than the depreciated value. This eliminates the otherwise financial gap in cover.
• Registration and Road Tax Coverage: Many RTI policies also cover the registration fees and road tax paid for the vehicle, further reducing your out-of-pocket expenses for a replacement.
• Protection Against Rapid Depreciation: New cars typically depreciate by 20-30% in the first year alone. RTI cover protects you from losing money to this depreciation.
• Enhanced Resale Value: Securing an RTI cover with a transferable car insurance policy can make your car more attractive to potential buyers of used cars in the future.

When is the RTI Cover Not Applicable?

Return to Invoice cover comes with certain limitations of its own. As a car owner looking for smart add-ons that come with comprehensive car insurance, you should be aware of situations when the RTI cover does not apply.

• When your car is older than 3-5 years, depending on the insurer, you may or may not get the RTI add-on for your car insurance
• An RTI cover becomes void if the car has been used primarily for commercial purposes unless mentioned otherwise specifically in the insurance policy
• The RTI cover does not apply to partial losses or minor damages where repair is possible and replacement of the vehicle is not inevitable or urgent
• With third-party-only insurance covers, most insurers do not offer the RTI cover as an add-on; it is mostly an add-on for comprehensive car insurance policies only

How to Calculate RTI in Car Insurance?

To calculate the RTI payout, subtract the car's IDV from its invoice price (which includes ex-showroom cost, registration, and road tax). For instance, if your car's invoice price is ?12,10,000 and its IDV at the time of claim is ?8,10,000, the difference of ?4,00,000 is what the return to invoice add-on bridges. The premium for RTI depends on your vehicle's age, model, and insurer. You can usually see the cost while you buy vehicle insurance online, where it is listed as an add-on option.

Is Return to Invoice Protection Cover Worth the Extra Premium?

Here's how to decide if return to invoice cover is worth your money:

• Vehicle Age and Value: RTI cover provides maximum benefit for new or nearly new cars when depreciation is steepest. For vehicles older than 3 years, the benefit diminishes as the gap between IDV and invoice value narrows.
• Driving Environment: If you live in an area with high theft rates or drive in conditions with higher accident risks, the additional protection may be well worth the cost.
• Premium Cost vs. Potential Benefit: Typically, the RTI premium costs 5-10% extra on your base car insurance policy. Compare this to the potential 20-30% depreciation loss you would face in the first year alone.
• Financial Planning: Consider whether you could comfortably cover the depreciation gap out-of-pocket if necessary. If not, RTI cover provides valuable financial security.
• Loan Considerations: If you have financed your vehicle with a car loan, RTI cover ensures you can fully repay the loan even if the car is stolen or totaled, preventing potential negative equity.

For most new car owners, especially those with premium vehicles, the relatively small additional premium for RTI cover offers significant financial protection and peace of mind that justifies the cost.

Conclusion

Return to Invoice cover is a useful add-on to your car insurance policy. It is especially helpful for new cars, where depreciation can reduce your claim amount after theft or total loss. While it does increase your premium a bit, the extra protection is usually worth it. For most car owners, it's a smart and safe choice.

When choosing your motor insurance provider, consider Liberty General Insurance (LGI), which offers exceptional Return to Invoice protection as part of its comprehensive car insurance solutions. Liberty General Insurance stands out with its Effortless Claims Assistance and seamless policy renewal with added benefits. Their additional protective covers, including RTI, provide enhanced security for your vehicle while their efficient telephonic services ensure you have support whenever needed.

Before making your final decision, carefully assess your circumstances, vehicle value, and risk tolerance. For most new car owners seeking complete financial protection, adding return to invoice cover to their insurance policy proves to be a wise decision that delivers valuable financial security.