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Insurance Company Estimate Versus Contractor Estimate. Which One is Right?

First, understanding how to read your adjuster's estimate is important. Most insurance companies use an estimating software called Xactimate. This is a line-by-line item estimating program and it can be overwhelming if you are not familiar with it. Every room that was damaged by your loss will have its own section and its own sub-totals. Each item in an affected room will be included in that line-by-line estimate. At the end of the total estimate it will have the grand total of all rooms. With this in mind let’s consider some factors on why the two estimates may be different.

How Each Affected Item is Handled

One of these factors could be incorrect coding of line items. For each specific item on the line-by-line estimate it will have one of the following codes: (remove), (reset), (remove and replace), (remove and reset) or (replace). Each one of these codes has a specific dollar amount factored into it including labor costs and materials. So, let’s say your adjuster's estimate says (remove and reset) for your floor trim. That means they’re paying for someone to physically remove the floor trim and reinstall the same exact floor trim that was previously on your floor. This is not new floor trim. But what if they entered the wrong code and it should have been (remove and replace) your floor trim. Your floor trim was completely damaged, and you need new floor trim. The cost would be higher for this one-line item because the contractor will have to buy new trim, cut it to fit, and then install it. As you can see just by this one example, if just one line item’s code is entered incorrectly it can affect the estimate. Now imagine if the adjuster made the same error in coding for each room. This is just a small item, when it comes to flooring or cabinets the cost difference would be much more significant.

How Affected Areas are Measured

Measurements may be off. Sometimes measurements may not be accurate, and this can affect the total cost of an estimate. While we might think that just having a few inches off won’t make a big difference, the reality is it will, especially when factoring in square footage of walls, ceilings, and floors. These same measurements are used for each trade being done, so if they’re not accurate that affects the pricing of labor for each trade involved. Flooring, sheetrock, painting, as well as the materials needed for each of those trades. Having a contractor confirm the accuracy of the measurements can alleviate this issue.

Missing or Inaccurate Items

Another factor could be items are missed and left off the estimate. This can be another reason why the two estimates are different. Here is an example; let’s say you need to have your windows replaced. On the estimate, it says remove and replace windows in the bedroom. Now most of us would assume that would include all the materials needed to install a new window, but it does not. With Xactimate every single item and every step must be included. That means there needs to be a line item for each specific piece of material that is needed to install that window, like trim, caulk, paint, etc. So, if the window trim is not on the estimate because the adjuster forgot it, then you won’t be compensated for it. This is just one example, but I’m sure you get the point. Adjusters are not infallible; they are just like the rest of us. An adjuster is also working in the best interest of their employer, the insurance company, not you, the policy holder. That is why it is a good idea to have another set of eyes on the estimate to make sure nothing is missed. Your contractor, who knows exactly each step and the materials needed to replace or repair your home is the perfect additional set of eyes you need.

Miscellaneous Cost Variables

Reasonableness of cost is also a factor. An insurance company may set a price for items or type of work, but is it always reasonable? Each geographic area will have their own costs. The variety of supply companies a contractor uses will have their own prices Each contractor will have their own expenses that they have to factor in. When this happens, the adjuster may be willing to make the adjustments but sometimes they aren't. Since your contractor does not have a contract with your insurance company, you as the homeowner may need to step in and challenge the adjuster and his pricing if you want your home repaired correctly and with the correct materials. Remember, the insurance policy you’ve been paying for should cover the cost to replace or repair your home with the same types of materials you had before a loss. And that includes your insurance company paying for reasonable cost differences.

The Right People to Work With

Even if you have the best insurance company and the greatest contractor who work well together, you will still experience the loss. Not just the physical loss to your home. It’s emotionally exhausting, physically disruptive, and financially difficult. Yes, having a loss is a big deal. That is why making sure you have a good team on your side is essential. I can not emphasize enough the need to have a contractor you can rely on. Many people shop by price, but remember you get what you pay for, including unexpected headaches. Shop by reputation, ask your friends and family for a referral. Keep in mind that many excellent contractors may not be found on Angi, Thumbtack, or similar companies. These listing services require contractors to pay to advertise with them. Online reviews are also a great resource you can use to get a feel for the company you’re going to eventually trust with your home and your family.

I hope the information in this article has helped answer your question, “Why is my insurance company's estimate of repairs different then the restoration company’s estimate? And why does it matter?” Knowing this information can equip you to make sure that you are receiving fair compensation from your insurance company.

We Can Help When You Need It Most

An ancient quote says, “Who of you wanting to build a structure does not first sit down and calculate the expense to see if he has enough to complete it?” R4 Restoration is happy to sit down with you and help calculate the expense, whether you just experienced the loss or have already received payment from the insurance company and are trying to get the repairs done. We are a licensed general contractor in Suwanee, GA. and have been working with the insurance industry for decades. We are always happy to answer questions and help educate our customers and the community, so please give us a call.

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