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Insurance · Loss Valuation and Settlement

What is 'betterment' in property claim adjustment?

Reviewed by Jordan Morley, Editorial Lead at 247SimpleTests. Written by the 247SimpleTests Editorial Team from the official source material cited on every question.

Correct answer

A deduction from the settlement when a repair or replacement upgrades property beyond its pre-loss condition

  1. A A deduction from the settlement when a repair or replacement upgrades property beyond its pre-loss condition
  2. B A bonus paid to the insured for filing a claim
  3. C Extra coverage for improvements
  4. D A type of property endorsement

Why this is the answer

Betterment (also called 'improvement' or 'upgrade reduction') is applied when repairs or replacement result in better property than existed before the loss. The insurer is only obligated to restore the insured to their pre-loss condition — not to improve it. The insured pays the betterment portion.
Source: Adjuster Exam, Betterment

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About this topic: Loss Valuation and Settlement

Three approaches: sales comparison (best for residential), cost (best for unique buildings), and income (best for investment property). Skilled appraisers reconcile all three. This is one of 10 Insurance Adjuster questions on loss valuation and settlement, each with a full explanation on a single study page.

New to this exam? Our Insurance exam guide explains the format, scoring, and how to prepare.

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