Safeguarding Your Luxury Car with RTI Coverage

Posted on: Jul 22, 2024 | 3 mins | Written by: HDFC ERGO Team

Safeguarding Your Luxury Car with RTI Coverage

Why you should consider taking up RTI add-on cover for your luxurious car

To have a luxury car like Mercedes, BMW, Audi, or Jaguar is a dream come true for many. But these cars are not cheap and, in fact, they are very expensive and cost a bomb. Even if you are a rational buyer who has obtained one of these cars after calculating your budget, the first thing that should come to your mind is the protection of this asset.

It is at this point that the importance of acquiring a suitable and all-encompassing motor insurance policy can be clearly realized. And when we consider the overall insurance plans especially those for luxury cars, the Return to Invoice (RTI) add-on cover cannot be overlooked.

Here's why you should invest in RTI insurance for your luxurious car

The RTI or Return to Invoice add-on cover that is available in car insurance policies replaces your car with a new car of the same make and model or returns you the manufacturer’s listed selling price of your vehicle at the time of purchase of the policy. This means in the event of a total loss, compensation is given based on the IDV of the car and not its showroom price. The value can be the invoice value when the insurance was purchased or the invoice of the new car at the time of total loss.

The invoice price is the amount your insurer will pay, if your car is stolen or is a total loss due to an accident, to enable you to purchase a replacement car, instead of the depreciated value. This means that when the luxury car suffers complete damage or is stolen, it still retains the showroom value despite the fact that it has been in use for several years.

The significance of RTI cover to key stakeholders can be summarised as follows

The RTI cover in car insurance is helpful and is very important, especially for those with luxury cars. Let us see what makes this cover so important:

1. New Cars

Buying a car is always an investment and needs a lot of financial planning. This is particularly true in the case of new and luxury cars that are very expensive. With the return to invoice add on cover if there is total loss in case of an accident or theft, the losses will be covered and thus, there is no financial strain.

2. Increases coverage

The cover increases the coverage for the own damage as all expenses are completely secured if the vehicle cannot be traced or is completely damaged.

3. Theft Cases

Car thefts are on the rise in spite of security measures and this becomes a major loss. The RTI cover is the ideal choice in these cases as one can get the full invoice value and the financial loss is minimised.

4. Total Loss Cases

If the car is completely damaged, there is a big stress to get repairs and most of the time the car does not work well. With the RTI cover, there is no stress as the insurance company will pay the invoice value and thus, the insured can get a new car and not bother about the repair work.

Exclusions in the RTI cover

Before buying any insurance policy or an add on cover, it is imperative to know the inclusions and exclusions. Similarly, when you buy car insurance online or offline, it is always good to buy comprehensive insurance and be aware of what is included and what is not.

Exclusions for RTI cover

1. Minor damages and small dents are not covered

2. There is no Third Party Liability coverage

3. The RTI add on cover can only be bought within the first 3 years of buying the car

4. For processing a claim under the RTI cover, FRI is mandatory. The claim will not be payable if an FIR is not submitted

Calculation of RTI add on cover for your luxury car

For the add on cover under your luxury car insurance, the insurance company compares two values when giving a return to invoice add on cover. These are:

1. The value of the luxury car that the insured selects. This could be the invoice value of the car which will be the ex-showroom price, registration cost, and taxes or the invoice value of the new car when the car gets stolen or damaged

2. The replacement price of the car is calculated on the ex-showroom price, road taxes and registration cost

3. The insurance company will sanction the lower of these two figures and settle that as the settlement value of the RTI add on cover

How much does it cost to have an add-on for RTI?

1. The return to invoice add on charges are calculated car’s IDV depending on the insured’s risk profile, RTO location, the car’s cubic capacity etc.

2. For cars with an original price of more than ₹50 lakhs for the brand, the excess is around 8-10% of the existing IDV.

3. Also, due to IDV enhancement when the policy is taken under RTI, there is a corresponding increase in premium at the time of its renewal.

Now that you understand how RTI insurance works for luxury cars, the following is a guide on how to purchase the policy.

When you are choosing car insurance online, it is wise to go for an RTI add-on to your policy.

1. You would be required to produce documents that include but are not limited to invoice papers, RC copy etc.

2. Ensure you purchase RTI cover jointly and pay the extra premium with the OD & TP premium.

Conclusion

The owners of luxury cars consider them as assets for life and status symbols. Guaranteeing the protection of the value has to be a major concern after buying the car. By paying an extra premium, you can secure it with the return to invoice add on insurance cover so you never worry about paying for anything.

In the event of any misfortune, RTI in car insurance will compensate for the original purchase price so that a new car can be bought and one does not need to bother with repairs in case of a total loss. This gives a lot of mental peace and one can enjoy driving the car without stress as the value of the car will be paid in case of a theft or a total loss. The advantage of RTI in car insurance is much more than the extra premium you have to pay for this coverage. So next time, you are buying comprehensive insurance, ensure you select the right add on cover and ensure your luxury car insurance covers you against the worst scenario of a total loss.

Disclaimer The above information is for illustrative purposes only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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