Insurance policies are full of terms and conditions that policyholders pay little attention to; one such term is betterment. It is likely you’ve never heard of the term nor understood what it means, unless you’ve come across it during the process of a claim. Betterment is a way for Insurers to limit the amount they pay out and ensure policyholders do not profit from their Insurance Claim.
In this blog we will cover everything you need to know about betterment and its role in Insurance Claims, and answer the following questions:
Betterment can be defined as ‘when someone replaces or repairs a damaged item in their property with something of higher value than the original after an Insurance Claim’. For example, if you suffer a flood in your home and your carpet needs to be replaced; a new carpet and underlay that is of higher quality and value than the original, would be considered betterment.
Your Insurer is not obliged to cover the cost of betterment. Whilst your Insurer is liable to pay for the cost of replacing and repairing parts of your property, any gap the value of original items and the value of replacement items, must be covered by you, the policyholder. This is to prevent any policyholder from profiting from an Insurance Claim. Unfortunately, it can also be used too quickly by Insurers to dispute a Claim and refuse a fair pay out.
To fully understand how betterment applies to you, it’s a good idea to read the small print of your policy terms and conditions. Within your policy documents you will find what your Insurer specifies regarding betterment. This will be an outline of their definition for betterment and any maximum liabilities they are willing to cover.
Involuntary betterment is when betterment happens unintentionally. This can happen when there is no other alternative to replace an item with. This is a common occurrence since technology and products improve and upgrade quickly. Often the original item cannot be sourced or replaced like for like. In these circumstances, the betterment is involuntary, and the Insurer has to take this into account when evaluating the settlement of your Claim.
When property cannot be replaced with the exact same item, an item or property that is as similar as possible and able to perform the same function, should be defined as of like kind and quality. In this situation, replacing property that is as similar as possible and provides the same function cannot be defined as betterment by your Insurer, and they are liable to cover the cost.
Not only is your Insurer contractually obliged to cover the cost of replacing like for like property, but they are also required to cover the cost of installing any new equipment that may be necessary for new items to function. For example, if a replacement item requires upgraded electrical wiring to function, the Insurer is contracted to pay for such work, as long as it gives the same functionality as before the damage took place. It is important to remember that any work or replacement that is necessary to reinstate the policyholder back to their pre-loss condition is not defined as betterment.
Betterment issues are a frequent cause of Insurance claim disputes. It can be tricky to navigate what constitutes betterment, involuntary or otherwise. Your Insurer may try to pay only for the original value of property, even if it is impossible to replace without improvement. They may try to get out of paying the difference by citing their betterment clause in your policy.
It is critical you understand the term betterment and what your Insurer is and isn’t liable to pay. Take a close look at your policy documents and look for:
If so, make note and be sure to notify your Insurer of their accountability to you under such conditions. If you are still struggling with this, you should contact a professional such as Oakleafe Claims who would be able to assist you in the matter. We are professional Loss Assessors who have years of experience in the Insurance industry.
Armed with this knowledge you can confidently negotiate your settlement with your Insurer to ensure they remain accountable to their contract with you, and you receive a fair settlement without delay.
Call in independent contractors who are proficient in the area you need assistance with. If part of your home needs to be rebuilt and there is a disagreement between yourself and your Insurer over how much needs to be replaced, ask a surveyor and builder for their professional opinions. They have accurate knowledge about laws and regulations associated with the work and will be able to decide what defines necessary work. Their advice can back up your argument regarding the extent of renovations required.
Even with the right knowledge, negotiating the terms and conditions of your Insurance settlement can be stressful and most definitely time-consuming. You may go back and forth over the same issues regarding betterment with your insurer and feel like no progress is being made. Meanwhile you’re left without the means to get your property back in order.
In such circumstances it’s helpful to call professionals who know exactly how to deal with Insurance issues such as betterment disputes. Loss assessors such as Oakleafe Claims, have the experience and expert knowledge to help you move your claim forward. We can manage your dispute for you and ensure you receive the pay-out you’re entitled to. We can look over your policy documents and accurately interpret all the terms and conditions regarding betterment. If necessary, we will argue your case on your behalf and protect your rights as a policyholder.
If you have been declined while trying to claim on your domestic or commercial insurance, we can help. We can also help with professional services, for example, Brokers, VAR Valuations and Managing Agents.