One often hears an owner asking “What is betterment?” The question was also recently raised in The Sectional Tile Living Facebook page.
Betterment is essentially about seeking an improved replacement for what was damaged. This is better explained by looking at two examples:
First example – An old awning
Imagine you have an awning over your door. It’s old and worn out, built years ago by a craftsman using welded metal and covered with canvas. Over time, it’s deteriorated, it’s torn, sun-beaten, and rusty. Now, you need a replacement, but this type of awning isn’t available off the shelf. You decide you want a new, upgraded awning made of aluminium, with modern features that the old one didn’t have.
The insurance company steps in. They assess the old awning and might only cover a portion of the replacement cost, especially considering depreciation. Let’s say they offer R500 for the old canvas awning, but a new aluminium awning costs R3,000. You would negotiate with the loss adjuster, who might agree that you pay the difference, R2,500 in this case. This way, you contribute towards the improved version, and both parties reach a satisfactory outcome.
Second example: Upgrading a geyser
Another typical example involves a geyser. Suppose you have a 150-litre geyser that requires replacement. Seeing this as an opportunity to upgrade, you decide you want a 200-litre geyser to accommodate your growing family. Here, the insurance company will cover the cost of replacing the old 150-litre geyser, and you would pay the additional cost for the 200-litre upgrade.
The concept of betterment charges
In some policies, especially overseas, the insurance company might explicitly call this a “betterment charge” and invoice the client for it. However, in South Africa, it’s usually handled less formally. The loss adjuster might negotiate and document your contribution towards the betterment cost, with the transaction taking place at loss adjuster or supplier level.
Conclusion
Betterment is essentially the contribution that an insured individual makes towards the cost of an improved replacement, over and above the basic replacement cost covered by insurance. Understanding this concept can help you make informed decisions during the claims process and ensure you get the best possible outcome for your needs.
Author: Mike Addison
Addsure is a leading sectional title insurance broker. Get fit and proper advice from advisors who understand sectional title.