Randall watches his brother Kip, panting and out of breath, brought on by the simple act of parking his new car on the street. This involved a black cover secured with ropes and a couple of bricks and the car placed directly under a streetlight. A discussion ensues whether a comprehensive insurance can alleviate some of the stress. The brothers’ discussion uncovers an even better option, specifically for new cars.

Randall: I know you spent a fortune for that car, but an insurance policy may be a better choice for protection compared to your daily ritual.

Kip: I did buy a comprehensive policy which covers theft, but I also read the conditions which state that in case of theft, they will only pay me the market value and not the purchase price I paid. That is a significant gap to fill and I must go through the extra steps considering that neither our society nor my office has covered parking.

Randall: Why don’t you buy a return to invoice add-on if you want that level of protection. And please don’t ask me what it does. The guys at insurance company did a great job of naming it.

Kip: My invoice has a bunch of items not related to the car, why will it cover all those ?

Randall: The add-on will get you compensation up to the ex-showroom price, road tax paid and purchase registration in case of theft or damage beyond repair.

Kip: Wow, with that level of compensation I can replace my car without large out-of-pocket expenses if needed! But why is it restricted only to theft and damages beyond repair?

Randall: The best use-case for this add-on is for new cars. Normal insurance is calculated using depreciation, which is extremely harsh in the initial years but is rational as the years pass by.

Kip: Doesn’t zero-depreciation cover give the same benefit and including for repairs as well?

Randall: It’s tricky ground here, but zero depreciation is ideally suited for repairs and part replacements and not for cases of outright theft and damages beyond repair. In such extreme cases, the zero-depreciation add-on will not kick in and comprehensive cover, which is built on market value for replacement will be the one to resort to.

Kip: Nice information, I will think about it.

Randall: Well, your car is not getting any younger and return to invoice is generally bought only for cars which are three years or younger. Beyond this time frame, the depreciation charged, in all likelihood, may approach the actual wear and tear and a normal comprehensive cover alone can get the job done of protection.

Kip: I will have to check out the cost, what if they charge excessively ?

Randall: Yes, you should check out terms and conditions before purchase. For instance, this add-on will cover only stock accessories included at the time of purchase. Also, a stamped FIR stating that the vehicle is unrecoverable or a garage report stating that the damage is excessive, is needed for claim processing. Normally, this add-on should cost an extra 10-15 per cent over the comprehensive cover cost.

Kip: Thanks for the information. Considering the new vehicle’s cost and the lack of proper parking in most places I commute to often, I think I will invest in this add-on in the initial years. Later on, like you said, I may replace this cover with zero-depreciation.

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