• Selena Thian

Understanding Betterment Waiver — The Cost Saving Factor in Motor Insurance

Replacing a new part of your vehicle may cost you more than you would imagine.

Before diving in, let us first wrap our heads around the basic premise of a motor policy. A motor insurance policy acts to put a vehicle in the same condition and value it would be prior to any occurrence of an accident. Thus, if an accident causes the vehicle to be badly damaged with the parts being irreparable, new accessories would be used by the workshops to fix the said damages.


This is when the betterment waiver comes into play. Betterment can be described as the portion of the repair costs that vehicle owners bear when the parts have been replaced with a new original part.


Conceptually, the betterment factor would be taken into account when new parts are used to restore the condition of the damaged car. The concept explains that the vehicle would be considered to be in a better and improved condition as compared to before the accident, thus, the betterment cost of having new parts in place of the old parts shall be borne by the vehicle owners themselves.


However, if the owner includes the ‘betterment waiver’ clause in the policy, the betterment costs will be waived. Meanwhile, for those who does not wish to pay the additional premium for this clause, the workshops will proceed to source for reconditioned or second-hand spare parts when claims arises.


The betterment waiver provides convenience and peace-of-mind at minimal costs.

The availability of the spare parts will greatly depend on the motor market and economy, with insurance companies having no hand in it whatsoever. There may be longer delays in the availability if the vehicle is of an older model or make. Hence, it is always advisable to waive the betterment factor for vehicles used on a daily basis to avoid any inconveniences when any damage claims occur.


The rate of betterment works on a scale which is generalised and adopted by the whole insurance industry. The betterment rate starts at 15% of the repair costs for vehicles of 5 years and increases by 5% every following year to the maximum limit of 40% for vehicles of 10 years and above.


Policyholders are always advised to review their own motor policies to understand and be aware of the terms and conditions of their insurance coverage in the event of an accident or claim. Prior to any renewals or new purchases, the consumers may request to obtain the vehicle market valuation from their agents as well. Other relevant information is also readily available on the Policy Wording and PIAM’s official website.


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