Betterment is a principle applicable in insurance where the insured party is responsible to make a contribution towards the cost of the claim because his repaired property will be in better condition after the repair than before the damage or loss took place. This additional payment has nothing to do with the excess amount payable on the claim.

One of the rules in insurance is that one should not be placed in a better position after a claim than before the claim and should this happen, the principle of betterment will apply. If the insured is financially in a better position after the settlement of the claim, due to the increase in value of the repaired asset, it is called betterment. The insurer will usually deduct the amount the insured has to pay towards the claim from their payment, making the insured responsible to settle the balance of the repair cost.

Two cases of betterment are discussed on the website of the Ombudsman for short-term insurance in South Africa. In both cases the ombudsman ruled in favour of the insured client. In the first case the insured party’s car was damaged through vandalism and paintwork needed to be prepared. Some parts of the car had to be resprayed totally in order to complete a proper repair job. The insurer deducted 25% for betterment. The ombudsman ruled that betterment should not be calculated on speculation and must be measured fairly in the marketplace. In this case the insurer could not prove betterment and had to refund the deduction to the insured client.