Zero Depreciation & Return to Invoice covers in Vehicle Insurance – A Comparison

Securing your vehicle withi an insurance policy protectsi you against financial lossesi that may arise fromi third-party liabilities or damagesi to your vehicle. Whilei the government of Indiai mandates all vehicle ownersi to buy third partyi insurance, a comprehensive coveri option is the betteri option. While comprehensive insurancei plans offer more protectioni to your vehicle fromi unforeseen damages, they doi not cover vehicle depreciationi and the cost ofi ownership. You can, however,i obtain this coverage byi paying an additional premiumi or opting for add-oni riders. Two of thei most common types ofi riders that guarantee additionali protection to your vehiclei are zero depreciation coveri and return to invoicei cover. Let us comparei the differences between zeroi depreciation & return toi invoice covers.

What is Zeroi Depreciation Cover?

With regular usage,i the value of youri vehicle depreciates over ai period of time. Depreciationi of the vehicle’s valuei is primarily caused duei to the wear andi tear of its parts.i As the vehicle’s marketi value reduces, so doesi the cost of thei claims filed against it.i In case your vehiclei is damaged in ani accident, the insurance companyi will cover the repairi costs after deducting thei depreciation of the partsi that have been repairedi or replaced.

However, you cani ensure you get sufficienti coverage against claims byi opting for the zero-depreciationi add-on rider. If youi have the Zero Depreciationi car insurance add-on, youi become eligible to claimi the depreciation value, whichi saves your out-of-pocket expenses.i You can buy thisi add-on for up toi 5 years from thei date of purchasing thei vehicle. Also, insurers typicallyi set a limit oni the number of zeroi depreciation and basic insurancei claims you can filei during a year. Notei that under a Zeroi Depreciation cover, the insureri may deduct some mandatoryi and voluntary deductibles.

What isi Return to Invoice?

In thei case of a comprehensivei insurance plan, the premiumi charged by insurers isi mainly based on thei approximate market value ofi the vehicle. This valuei is known as thei Insured Declared Value (IDV).i During accidents in whichi your vehicle is damagedi beyond repair or ifi it is stolen, thei insurer will pay youi the approximate market valuei of your vehicle ati that point in time.i The insurer considers thei necessary deductibles and depreciationi of the vehicle whilei making the payment againsti such claims.

However, with thei Return to Invoice add-on,i your insurer will payi the purchase or invoicei value of the bike,i including registration charges andi road tax. This add-oni is only applicable ifi the cost of repairsi exceeds 75% of thei IDV and the vehiclei is less than threei years old. You shouldi ideally opt for thei RTI in car insurancei add-on if you livei in an accident-prone area.i However, the RTI add-oni is typically expensive andi can increase your premiumi amount considerably.

Difference Between Zeroi Depreciation & Return toi Invoice?

There are three fundamentali differences between zero depreciationi and return to invoicei covers.

• A Zero Depreciation cari insurance add-on covers thei depreciation of your vehicle’si parts being repaired ori replaced. A Return toi Invoice add-on covers thei purchase or invoice valuei of the vehicle ini case it is stoleni or is damaged beyondi repair.
• Zero Depreciation covers bridgei the gap between thei cost of the partsi that need repair ori replacement and their deprecationi value. Return to Invoicei covers bridges the gapi between the purchase costi and the IDV.
• You cani get zero depreciation coveragei for up to 5i years from the timei you buy your vehicle,i whereas the RTI add-oni is available for onlyi three years from thei time of purchasing thei vehicle.

Final Note: Insurance add-onsi are a great wayi to enhance your insurancei policies since they coveri losses not covered byi the base plan. Dependingi on where you livei and the kind ofi coverage you need, youi should choose suitable add-onsi that enable you toi get maximum benefit.

Disclaimer: Fori more details on riski factors, terms & conditionsi please read sales brochurei carefully before concluding ai sale. *The discount amounti will vary subject toi vehicle specification and placei of registration