When you were a child, the principles of Betterment were clearly illustrated on a daily basis in the playground. Johnny wanted to swap his conkers for David’s lollipop. David felt that his lollipop was worth more than the conkers. Since the lollipop could not be made smaller, Johnny had to contribute something extra in order to balance the scales… like a penny-sucker.

The principle of Betterment is exactly the same.

Where a damaged part cannot be repaired, Insurers will usually repair using new parts. However, if the damaged part is a lifed item, using a new replacement part will put the Owner into a better position than he was prior to the loss, since he will have extended the available life of that part as a consequence of its replacement.

Hence, in order to balance the scales (like David and Johnny did) the Insurers will call for a contribution to be made in respect of the lifed part that was replaced with a new one.

The amount of the contribution is based upon the amount of useful time gained by the Owner as a fraction of the life of the part applied to the usual overhaul or replacement cost, whichever is appropriate.

Insurers do not relish the application of Betterment to losses as it invariably causes unhappiness and can lead to severe arguments, sullying an otherwise hassle-free claims settlement. However, in the absence of any other solution (such as finding a replacement item with a similar useful life to the damaged one), and cogniscent of the need to stick to the principle of indemnity as far as possible (placing the Owner in the position he was in prior to the loss, without undue benefit), Insurers are often left with no alternatives.

Many aircraft owners ignore the need to make provision for the overhaul or replacement of lifed items, on the basis that they’ll find the money somehow when the time comes. or that they’ll have sold the aircraft long before overhaul or replacement is required. What they don’t allow for is the forced overhaul or replacement of lifed items as a result of accident damage occurring prior to the normal overhaul/replacement date.

This lack of preparedness is what causes the problems, so be warned and make proper provision during the life of your aircraft.