Insurance Betterment

Avoid insurance claim disputes.
Avoid insurance claim disputes.

Consider adding insurance betterment to your car insurance policy. It might save you a lot of money on your car repair bill after an accident.

Insurance Betterment Defined

The purpose of car insurance is to make you "whole" - in other words, to get your car back to the physical state it was before the accident occurred. Insurance is not designed to make the car better or more valuable than it was before the accident. Because of this, an insurance company will usually not agree to pay for replacement parts which are better than the parts being replaced.

A repair shop is usually directed by the insurance company to avoid using new parts when working on a car after an accident. They prefer for the auto mechanic to select high quality used parts to replace the damaged parts. Typically the parts used have been reclaimed from other automobiles.

If old parts or equipment are replaced with new parts, the insurance company lingo calls this action "betterment."

Betterment is Not Typical Coverage

Most insurance policies do not have betterment as part of their car insurance coverage. The insurance company will require the auto shop to follow industry repair guidelines, which typically specify used, rebuilt parts. The parts are still safe to use, they just won't last as long as a new part.

New parts might be used if acceptable used parts are not available or if the industry standard for the repair is to use new parts. For example, if an oil filter is replaced, it will be replaced with a new oil filter even though the old oil filter was not new at the time of the accident.

Company Policies and State Laws Define Coverage

Insurance company policies can also affect how the betterment concept might be applied during the settling of an insurance claim. The resale value and depreciation are frequently taken into consideration.

  • Resale value - Part of making a car "whole" is to maintain the same resale value after the accident as the car had before the accident. Sometimes an insurance company will reduce the claim settlement if the vehicle's post-repair resale value is greater than its pre-accident resale value.
  • Depreciation - An insurance company might base their claim settlement on the age of the part. For example, if a tire with 30,000 miles of wear was destroyed in the accident and the tire was expected to last 60,000 miles, the insurance company may only reimburse for 50 percent of the cost of the new tire.

Not all states have the same regulations about the concept of betterment in car insurance policies. Some states require betterment, others do not. A call to the state insurance regulator can clarify the regulations for a specific state.

Betterment Without Coverage

If your auto coverage doesn't include insurance betterment you always have the choice to initiate betterment. You can demand new parts and then pay the repair shop the difference in the cost between the used and new part.

Repairing a car after an accident can also be a good time to upgrade your car. Suppose you want to add better tires or a chrome finished trim ring on your headlight instead of just replacing what was destroyed in the accident. All you need to do is just get an estimate of the replacement cost of the old tires or trim ring and the cost of the new tires or trim ring and then discuss the estimates with your insurance agent. By paying the difference you can usually upgrade your car as part of the accident repair process.

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