Improvement & Betterment

Improvement and betterment definition

What is improvement and betterment? Once again we are looking at how claims are actually paid out. If you have guaranteed replacement cost coverage then improvement and betterment will not be an issue for property insurance. For automobile insurance you need the waiver of depreciation (shown on the policy declaration as SEF 43R or SEF 43RL) for this protection.

Without the waiver of depreciation then for automobile insurance this can occur in the case of a collision or upset and the required repair of damage to your vehicle. An example is an older vehicle is involved in a single-car accident such as losing control on ice and sliding into a post. The necessary repairs include replacing parts of the vehicle. Since new parts will be used the vehicle has now been improved from its original condition. This betterment is considered in the payout to you. This is just one example, it could another type of loss under the Section C coverage such as fire or theft.

Claim payout example

The claim could be paid out in this manner:

  • Cost of repairs = $2000
  • Less improvements and betterment = $200
  • Less deductible = $500
  • Net payable to you = $1300.

Further limitations

The repair garage might be paid directly by the insurance adjuster and you will be required to pay the $700 difference at the start of the work. If you did not have the ready cash then you would be forced to delay repair.

The risk in this choice is that if there is a further loss then there will be an examination as to what damage occurred prior to the the most recent accident. It can get quite complicated. If the damage to your vehicle has been from hail then you could have a limitation of hail exclusion added to your policy (SEF 13H) and further damage claims by hail would not be paid.


When you look at property insurance this topic of improvement and betterment is looked at in a different manner. You have improved or bettered the apartment you rent or the business location that you lease.

In both cases you need to consider the costs of improvements and benefits within the amount of contents limit that you purchase. If there is a claim then you could be affected by co-insurance if you failed to insure to the correct value.

It is very important that you know where you will stand if you find yourself in a claims situation. Ask questions. Be prepared to do your homework and provide the correct information to the broker or agent when initially setting up your policy and then upon review.

Insurance answer

Remember that your broker or agent cannot act as an insurance appraiser or an adjuster. Decisions as to how your policy will respond will be determined by how the policy was set up. Ask your questions now and avoid surprises later.