We live in Alberta and purchased a car with some hail damage…

The insurer (whether yours or the third party insurer) would be justified in paying out what the market value of the car at the time that it was totalled. That would not be driven by what you paid for the car, but on what it could have been sold for in an independent sale just prior to the accident. So as the hail damage would decrease the market value, it is proper to deduct some amount from the payout that would otherwise be payable. The betterment clause prevents payout of the value of the care without regard to the hail damage, as you would otherwise be put in a better positions and with a more valuable vehicle than before the accident.

What is harder to determine is the appropriate amount to deduct. Simply saying that this damage would reduce the value by half seems arbitrary. Hail damage could be extensive and require several thousand dollars of body work to repair or it could be a few minor dents that may just be hundreds of dollars. So if you have some proof that the damage was not as significant, then you could argue that the deduction by half is too excessive. This may depend on what the car dealership says in their letter to the insurer regarding the hail damage.

I hope this is helpful. If you have no further questions, please rate the answer positively, as otherwise the site does not credit me, even if you have paid a deposit. You can still ask follow up questions after rating though, if you wish.

Thank you for the positive rating. The site will email you a survey within several days. I would appreciate your taking time to complete that survey and providing positive feedback. If you have questions in the future on other legal matters, you can refer to my user name of law.hut at the outset of your post. I will do my best to answer as soon as possible.