I recently read an email exchange between a design professional and his client in which the design professional advised the client that betterment is not covered by professional liability insurance. While that is true, the example he used to explain betterment to his client was not. The architect stated: “For example, if I leave a wooden door off the plans, my insurer will pay for the door plus any determined damage, but will not pay for a gold-plated door.”
The basic concept of “betterment” (also referred to as “added value”) is to restore an injured party to the position it would have been in had it not been for the wrong of another party. Damages should not, however, benefit the injured party beyond restoring it to its rightful condition. In construction, repair of a faulty design or installation of an omitted component in practice may leave a client with a better structure or one with a longer useful life than described by the original specifications.
Thus, in the above example, the design professional would not have to pay for either a wooden or a gold-plated door. The client should pay what the cost would have been had the door been included initially, while the design professional should only bear the costs caused by the omission itself (i.e., costs associated with the change order or retrofitting of the part.)
A betterment defense is an option available to design professionals who come up against claimants seeking remedies for design errors and omissions that go beyond that to which they are justly entitled. While the concept is widely recognized, design professionals may want to consider including in their contracts betterment-specific language that reflects the normal legal liability of the parties and clarifies that the design professional is not responsible for betterment or added value. Here is one example:
Design Professional will pay the reasonable cost directly associated with negligent errors or negligent omissions by the Design Professional or Design Professional’s subconsultants less the increased value to the client created by such change.