Xactimate, contractor bids and estimate disputes

Your insurer's estimate and your contractor's bid will rarely match, and the software is seldom the reason. Xactimate, the estimating program made by Verisk, prices whatever scope the adjuster enters, so the dollar gap usually traces to what is in the scope, how many units were measured, which line items were chosen, and whether overhead and profit is included. Find which of those four differs and you know what to argue.

An estimate is not a policy payment. It is the insurer's opinion of the cost of covered repairs, and it can be corrected with evidence. This guide covers how to read one and how to answer it.

What an Xactimate estimate is

The adjuster measures the damage, often with a sketch, a roof report from aerial imagery or a tape measure, and enters rooms, walls and roof facets. The program then offers line items such as "remove and replace 3-tab shingle," "paint walls, two coats," or "drywall, 1/2 inch, hung, taped and floated." Each line is priced from a regional price list, which Verisk updates on a regular schedule, and the totals roll up into a summary.

Three features of the output matter for disputes:

• It is line by line. A missing line is a missing payment. Insurers rarely add what the estimate does not mention.
• Prices are database averages for a region, not a bid. A contractor with a backlog after a hailstorm may charge more than the list, or the list may lag a spike in materials. See building materials, labor shortages and claim costs for why prices move.
• Depreciation is calculated after the fact. The estimate shows replacement cost value, then deducts depreciation to reach actual cash value. See recoverable depreciation: getting the rest of your claim.

Many other tools exist, and some insurers use in-house or competing software. The disputes look the same either way.

Reading the summary page

The first page is a recap. Look for these lines, in roughly this order:

Then read the room-by-room detail. Ask the adjuster for the complete estimate with photos and sketch, not only the summary. If the insurer sent a PDF without the detail pages, request them in writing. Some states require the insurer to give you a copy of the estimate on request, and the home insurance rules by state points to your regulator's rules.

Why the bid is higher: the four usual causes

1. Scope. The adjuster saw one slope of hail damage and wrote one slope, while your roofer found damage on all four, or the adjuster did not see the wet insulation behind a wall. Scope disputes are the most common and the most winnable, because they turn on evidence. A second inspection with your contractor present is a normal request.

2. Quantities. A few percent of difference in roof squares or square footage of drywall compounds across every line. Ask for the measurements and compare. Waste factor for shingles and flooring is a frequent difference.

3. Line items and method. The estimate may use a cheaper or smaller task than the work really takes. Examples include patching where the code requires replacing, "detach and reset" where the item cannot be reused, or a repair line where a full removal is needed. Your contractor can explain what the work involves, and a photo of the actual condition does more than an argument.

4. Overhead and profit and pricing. A general contractor who coordinates multiple trades has real costs, and many insurers include overhead and profit when a job reasonably calls for a general contractor. Some apply a rule of thumb, such as three or more trades, that the policy does not state. Standards vary by insurer and state, so ask in writing what standard applies. Pricing disputes arise when a local price is above the list. A signed local bid or invoice is your evidence.

Say an insurer's estimate for a hail roof is $14,600 and a contractor bids $21,300 (hypothetical). A line-by-line comparison finds $2,200 for a second slope the adjuster did not measure, $1,100 for decking replacement the roofer documented with photos, $900 for the flashing and drip edge the estimate omits, $1,300 for disposal and permits, and $1,200 of difference in the shingle unit price. Now there are five specific disputes with evidence for each, instead of one argument about $6,700.

Should the contractor "go to Xactimate"?

Many contractors write their own estimates in Xactimate so the insurer sees a familiar format. That makes the comparison easier, but it does not bind the insurer. The insurer owes what the policy covers, not what a contractor's software says. A good contractor estimate separates what is necessary from what is optional, and notes code requirements.

Be careful with two things. First, a contractor who promises to "work with your insurance" or to waive your deductible is describing something many states restrict; the deductible is yours to pay, and a rebate disguised as a discount can be an insurance fraud issue. Second, signing an assignment of benefits or a contract that lets a contractor negotiate directly with the insurer changes who controls the claim. Some states have limited or banned assignments; Florida banned them for policies issued on or after January 1, 2023. Read before you sign. See Florida.

A supplement, step by step

1. Get the complete insurer estimate and the photos. Mark each line you dispute.
2. Get a written, itemized contractor bid that follows the same layout as the insurer's estimate, so differences can be seen line by line.
3. Add evidence for each difference. Dated photos, a moisture reading, a manufacturer specification, a building code citation from the local permit office, a supplier quote.
4. Send a supplement request in writing to the adjuster and claim representative, with a short cover letter listing each disputed line, the amount and the evidence. Keep it factual.
5. Ask for a reinspection if the issue is scope, and for a written response by a date.
6. Keep the record. If the insurer does not answer or only partly agrees, the paper trail supports the next step.

Hidden damage found during work, such as rotted decking, should be reported before it is covered up, with photos. See supplemental claims and reopening a closed claim.

When the numbers still do not meet

If both sides are acting in good faith and still differ on the value, the policy's appraisal clause lets each side name an appraiser, with an umpire if they disagree. It resolves the amount of loss, not whether the loss is covered. A public adjuster can also prepare and negotiate the estimate for a percentage fee set by state law or contract; whether the fee is worth it depends on the size and complexity of the claim. Complaints about slow or unreasonable handling go to your state insurance department. The steps are laid out in underpaid home insurance claim: how to push back.

Remember that matching and code upgrades sit outside the line-item arithmetic. Whether the insurer must replace undamaged siding to match, or pay for code-required work, depends on your policy and state; see matching: when new shingles or siding don't match.

Key takeaways

• A difference between the insurer's Xactimate estimate and a contractor's bid almost always comes from scope, quantities, line items or overhead and profit, not from the software.
• Request the full estimate, not the summary page, and compare it with an itemized bid line by line.
• Support each disputed line with dated photos, measurements or code citations, and send it as a written supplement.
• Be careful with contracts that assign your claim or promise to absorb your deductible.
• Appraisal, a public adjuster and the state insurance department are the next steps if a good-faith supplement does not close the gap.