In the state of New Jersey, are the insurance companies allowed to take betterment off of a remanufactured component installed into a vehicle after a collision?
Asked by Joe Frohlich, Radical Motorsports, Ramsey, N.J.
Deductions for betterment and depreciation are permitted only for parts normally subject to repair and replacement during the useful life of the insured motor vehicle. See the relevant piece of the New Jersey Administrative Code below:
NEW JERSEY ADMINISTRATIVE CODE
TITLE 11. DEPARTMENT OF BANKING AND INSURANCE DIVISION OF INSURANCE
CHAPTER 3. AUTOMOBILE INSURANCE
SUBCHAPTER 10. AUTO PHYSICAL DAMAGE CLAIMS
11:3-10.3 Adjustment of partial losses
(i) Deductions for betterment and depreciation are permitted only for parts normally subject to repair and replacement during the useful life of the insured motor vehicle.
Deductions for betterment and depreciation shall be limited to the lesser of an amount equal to the proportion that the expired life of the part to be repaired or replaced bears to the normal useful life of that part, or the amount by which the resale value of the vehicle is increased by the repair or replacement. Calculations for betterment, depreciation and normal useful life must be included in the insurer’s claim file.
Charlie Barone has over 36 years of experience in collision repair and is an ASE Master Certified technician and a licensed damage appraiser.