In my continuing FAQ series, I thought I would answer a question asked to me today: what is betterment?
Betterment is an interesting concept. Insurance, as you know, is designed to put you back into the position that you were in before a claim occurred. In other words, if your house burns down, insurance should rebuild your house. If your car is damaged, insurance should repair your car. Easy enough, right?
Well, some things need to be replaced and put you in a position “better” than you would normally be in. For example, what if your brakes need to be replaced? If your brakes were worn and now they are brand new, you have been “bettered.” In this case, the insurance company can take betterment. Think of this as depreciation.
However, betterment cannot occur to certain things. You cannot better a body part of a car. Why? Because they do not wear out. Betterment only applies to parts that wear out. Have you ever seen a hood wear out? Probably not. Why? Because they generally do not wear out.
So, if the insurance company replaces your hood, they should not charge you betterment. If they do, you should yell and scream and tell them that they need to stop. Betterment, according to the California Fair Claims Practices Act, only applies to parts that wear out. When in doubt, ask the repair facility.