It happens to just about all of us at some point in time, whether we are driving or our car is just parked on the street, eventually an accident happens. When it does, most people don’t throw their cars away, they call insurance companies and get their car fixed. When an accident is covered by insurance most of us feel like there should be no charges applied and the insurance will pay it all.
Often that’s not the case, and insurance companies still leave a bill for the victim of the accident. The most common bill that shows up after the work has been done is what is called a “betterment charge.” So, what is betterment?
When your car comes off the manufacturing floor, it is built with brand new parts and rolls out to the dealership with very few miles on it. Unless you get into an accident as soon as you have purchased the vehicle and are pulling out of the dealer’s lot, then it’s likely you will own the car for a while and put many miles on it before an accident occurs.
Those months and miles build up, and that means the parts in your car begin to wear and degrade more and more. Even if you’re not in an accident, your car can experience a breakdown or need parts replaced during regular maintenance. Radiators wear out, tires and brakes need replaced, lights stop working, and a myriad of other issues crop up from daily driving.
Insurance companies take advantage of this fact by claiming that if they need to replace parts of your car then it is making your car better than it was. Since you would eventually need to replace parts anyway, then if they’re damaged in an accident you should have to pay part of the cost.
While that may seem ridiculous and unfair, it’s legal and likely written into the insurance contracts of anyone that may damage your car. Basically insurance companies feel that it’s not their responsibility to supply you with new and better parts for your vehicle, and having written it into their terms and conditions, they will win if you challenge them on it.
That’s the basic gist of a “betterment clause,” your car gets broken by someone else, and you have to pay the difference between the cost of a new part and the old ones already in use. There is some good news though, as betterment clauses may be subject to state laws.
For instance, in Wisconsin if the new parts don’t make the resale value of the car higher than it would have been otherwise then no betterment charge can be applied. This means that unless it replaces a relatively major component of the car, like the engine, then you may not have to argue about it with the insurance company.
One thing to avoid is requesting upgraded parts during the repairs if you wish to prevent paying a betterment charge. If your alternator is destroyed in an accident, requesting a higher power producing replacement that costs more than the original will likely not be covered. Depending on the insurance company, they may allow for you to pay for the parts while they cover the labor if it doesn’t cost more in time than the original parts would have.
We’ve all heard that cars begin to depreciate as soon as we sign the paperwork to buy one. That begs the question, what exactly is depreciation? Generally, there are two major classes of depreciation, obsolescence and erosion.
Obsolescence is when parts of what you own become outdated and are no longer standard parts that can be easily found and replaced. Cars that don’t have modern components will resell for less because the standard options on a new car will be greater in value than those of years ago. Sometimes the cost to replace a component that is no longer being made can be much more costly than replacing it with a modern alternative. That means fitting your car with all original parts may actually bring about a betterment charge because of the added cost to use parts that have become obsolete.
Erosion is just the wear and tear that occurs as you use your car. It’s why tires come with a mileage rating, after 40,000 miles they will be worn down to the point of needing replaced, or whatever the case may be. If you’ve driven 30,000 miles on those tires then an insurance company may want to only pay for the 10,000 miles that are left on those tires. That leaves you with a bill that covers the other 75 percent of the cost.
While it may not seem fair, if you’ve had a car damaged in an accident, be prepared to face some portion of the bill. Dig out that fine print in the insurance policy contracts to be sure of what your responsibility may be. The big thing to take away is that it’s not the service technician or auto shop causing the bill, so if you get a bill for a betterment charge, point the blame where it belongs, and that’s with the way insurance companies are allowed to operate.
Alexander Body & Fender is a professional auto body shop serving Northeast Ohio. Check out some of the services we offer. Read more articles like this one on our blog. If you’re in the Northeastern Ohio area and you need an auto body shop, contact us! With 90 years of experience, we are The Gold Standard.Tags: auto collision, betterment charge