When should an RTI be applied?
RTI can be applied under certain situations only:
- An insured cannot make claims for small damages like cracks or dents. The RTI cover is useful to cover complete damage to the vehicle or when the vehicle is stolen.
- RTI cover is for complete reimbursement of the cost of the vehicle at which it was initially bought. That is, it helps recover the on-road price of the vehicle.
- The RTI cover is suitable for new vehicle owners because if a new vehicle is lost or completely damaged in an accident, a depreciation cost at the rate of 5 % in the first 6 months and 10 % in the following year is still levied on the vehicle. The depreciation rate keeps on increasing for each subsequent year. Therefore, it is prudent for the owner to include this add-on cover to a comprehensive car insurance policy.
- When the insurer settles a claim with RTI add-on cover, they may either pay the insured the entire on-road price of the car or exclude the cost of specifics, like road tax, registration charges etc. Insurance companies at times compensate on percentage basis in addition to ex-showroom price of the vehicle.
- RTI cover can be availed by vehicles not older than three years. For older vehicles than 3 years, the depreciation cost will be much higher and it will not make financial sense to the insurance company to give this facility to customers. The company would suffer losses if it were to give such a cover to customers.
- A normal vehicle insurance cover will not fetch the insured an amount that is equal to the on-road price. Therefore the RTI add-on is beneficial to safeguard a new vehicle especially in areas where vehicle theft is common.
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