The roads are always an unpredictable place for your dear car. Your car runs the risk of sustaining bumps, dents, scratches or any other damages. Some of these damages could end up becoming costly affairs for you and cause many inconveniences.
Hence, it is essential to protect your car with an insurance policy that safeguards you and your vehicle in case of any unfortunate events. To drive a car in India, you need to have third-party insurance at least. However, to provide adequate coverage for your vehicle, you can boost your motor insurance policy with the help of add-ons. One such add-on that accentuates the cover of your policy is the Return to Invoice add-on.
What is Return to Invoice?
Let us understand the Return to Invoice add-on with the help of an example. Mr Mehra’s recently purchased car was stolen from the parking area outside his residence at night. He rushed to file an FIR with the police and informed his insurer, as soon as he realised the situation. Mr Mehra’s insurer accepted his claim was accepted and Mr Mehra was relieved, expecting full compensation for his loss. However, when the settlement amount was received, Mr Mehra was disappointed big time as he was not compensated with the full value of his stolen car. At this point, Mr Mehra realised that when a new car is stolen, the insurer does not pay the invoice value of the vehicle but pays according to the IDV of the vehicle.
What is Insured Declared Value?
Now, you may want to know how much reimbursement can be availed by getting car insurance. Generally, the insurer decides the IDV or Insured Declared Value of a car by deducting the depreciation from the invoice value. This means that the reimbursement is the current market price of your car, which is less than its original price. Hence, you do not get the full amount that you paid while purchasing the car. This is where the Return to Invoice comes into the picture to cover the gap between the IDV and the invoice value of your car. It fetches you the complete amount of loss when you raise a claim for an accident causing a total loss.
This add-on is available at an additional cost, usually 10% more than comprehensive car insurance. Additionally, you can only avail of this cover till your car reaches a specific age that varies from one plan to the other.
How does Return to Invoice work?
The Return to Invoice cover is not recommended for covering small dents and repair expenses. This add-on is more suited for covering the full value of the car in case of complete damage or loss. Such cases usually include incidents like car theft or heavy damage accidents. The Return to Invoice cover goes beyond the basic car insurance to get you the actual value of your car. Interestingly, 6 months after a car is sold its value depreciates by 5%, and this percentage doubles itself within a year. This means that you will lose money even if your car is just 6 months old. But with a Return to Invoice add-on, the insurer pays the full value of your car until it is at least 3 years old.
Usually, the insurance provider pays you the invoice value of the car. This cover usually includes one-road price, registration costs, road tax, dealer’s handling etc. Often insurers also provide an additional compensation between 10% and 20%, besides the car’s showroom price. Therefore, Return to Invoice cover plays a crucial role in saving the car’s depreciating value and providing its full price.
