Just like everything in life, your bike, too, depreciates with time due to inevitable wear and tear. Even after regular maintenance, you cannot stop it from getting old. A decrease in your bike’s value that occurs over time is called bike depreciation.
The percentage of this depreciation may seem small at the beginning, but it increases with each passing year. And it not only impacts your insurance premium, but your bike’s Insured Declared Value (IDV) as well. The insurer will cover your bike according to its IDV i.e., its current market value. So if your bike meets with an accident and gets damaged beyond repair, or is stolen - you will be compensated with the depreciated amount and not the price you bought it for originally.
Let’s take an example to understand this better.
Suppose, Varun bought a Royal Enfield Meteor 350. Its ex-showroom price in Kolkata is Rs. 1,96,000.
RTO + Road Tax + Other charges will cost Rs. 15,500 (excluding insurance).
Therefore, the on-road price of the bike becomes Rs. 2,11,500 (excluding insurance).
Now, the bike gets stolen within the first year of purchase. Let’s assume it depreciated by 10% within the first year.
Hence, depreciation value = 10% of Rs. 2,11,500 = Rs. 21,150.
Now, the insurance compensation Varun is eligible for is -
Rs. 2,11,500 - Depreciation = Rs. (2,11,500 - 21,150) = Rs. 1,90,350
So Varun will receive only Rs. 1,90,350 from the insurer. But that does not sound fair, right?
To claim the complete on-road price for his stolen bike, just a basic Two-Wheeler insurance will not be enough. He needs something known as a ‘Return to Invoice Cover’ in his policy.
What exactly is that? Let’s find out!
What is a Return to Invoice Cover?
If your two-wheeler meets with an accident and suffers a total loss, or if the vehicle gets stolen, the insurance company will generally pay you the IDV that is mentioned in your insurance policy. It will be much lesser than the actual invoice value of your vehicle. An invoice value is the initial price that the manufacturer or dealer had charged you for the bike.
The Return to Invoice Cover (RTI Cover), also known as Invoice Protection Cover, will help you receive the complete invoice price during a total loss or theft claim. With the RTI Cover you will be able to claim the entire invoice value of your bike instead of just the IDV.
Benefits of the Return to Invoice Cover
- It can be added to a comprehensive bike insurance or a standalone own damage policy, by paying an extra premium.
- It enhances the coverage of the insurance policy of your bike, by providing you protection against theft, total loss due to accidents, natural or man-made calamities, and damages that are beyond repair.
- In case of a claim, you will receive the invoice value of your bike - which will be = ex-showroom price + registration charges + taxes.
- It will help you get a similar or the same model replacement of your bike, in case the damages caused are beyond repair.
- It’s the most useful for new bike owners, as in case of complete loss or theft, they can be assured that they will receive the invoice value of the bike.
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Who Should Buy an RTI Cover?
You should consider adding a Return to Invoice Cover to your insurance plan, if -
- Your bike is less than 3-5 year-old.
- You have purchased a brand new bike.
- You live in a theft-prone area, or you feel it isn't secure.
- You are a frequent long-distance traveller and are prone to accidents.
- You live in an area without secured parking space.
- You live in a hilly or flood-prone area.
Exclusions Under The RTI Cover
As much as it is important to know when the insurance company will provide you cover under RTI, it is equally important to know when they will not - so you don’t have any hassles when you make a claim.
The RTI Cover is not applicable if -
- Your bike is more than 3-5 year-old.
- The bike is stolen and gets recovered within 90 days of the theft.
- An FIR is not filed in case of theft of the vehicle.
- Your bike is not in an unrepairable condition after an accident, but has suffered only some minor damages that can be easily fixed.
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How Do You Calculate The RTI Cover?
When you purchase a new bike, you pay its ‘on-road price’ - which includes
- Showroom price of the bike
- Registration charges
- Insurance charges
Let’s Compare And See What Happens If You own A Two-Wheeler Comprehensive Insurance Plan With And Without An RTI Cover.
|Comprehensive Policy Without RTI Cover
|Comprehensive Policy With RTI Cover
|In case of any theft or total damage to the bike, you will get the IDV value as mentioned in the insurance copy - which will be lesser than what you had to pay while purchasing the bike.
If your bike is damaged beyond repair or stolen, the compensation will be equal to the original value of the bike, which depends on -
Vehicle price = Ex-Showroom Price + Road Tax + Registration Charges (at the time of the original purchase)
Vehicle price = Current Replacement Price = Ex-Showroom Price + Road Tax + Registration Charges (in case the same model is available)
This means, you, effectively, get back all the money that you spent on buying your bike.
Let’s take Varun’s example again. If he had added the RTI Cover to his bike insurance policy, he would have received the invoice value of the Royal Enfield Meteor 350, as a compensation from the insurer.
This means, instead of just Rs. 1,90,350, he would have gotten the complete on-road price of the bike, i.e. Rs. 2,11,500 as the compensation.
Bike insurance financially protects you in case of unfortunate incidents involving your insured vehicle. However, that’s not it. It’s more than just about financial protection when a liability occurs, it can prove to be of greater help if you ensure certain things while buying the policy. One such additional benefit is the Return to Invoice Cover. With an RTI Cover in place, you can bridge the gap between the bike’s IDV and its invoice price. Go this extra mile for your bike, and it will go many extra miles for you!