Under BAC, is the insurer required to pay for betterment?

• A. The insurance company does not have to pay for betterment
• B. The insurer must pay for betterment
• C. Betterment is covered under a separate rider
• D. Betterment is only paid with a written agreement

Answer: (A)

Under BAC, the goal of indemnity is to restore the insured to the condition that existed before the loss, not to upgrade or improve beyond what was there. Betterment would mean paying to replace with something of higher value or quality than the original, which is outside the typical obligation unless the policy specifically provides for it. Therefore, the insurer is not required to pay for betterment. Only if there is a separate endorsement or a written agreement between the insured and insurer to cover upgrades would those costs be payable.