Insurance Restoration: How to Estimate and Get Paid Fairly on Claims Work

Insurance restoration is a different business

Cash-pay residential is straightforward: homeowner has a problem, you price it, they approve, you do it. Insurance restoration is an entirely different game. The customer is the homeowner, but the payer is the insurance carrier, with adjusters, software pricing databases (Xactimate, Symbility), and strict scope documentation in between.

Contractors who master insurance work can generate 40-60% of annual revenue from it, with higher margins than cash-pay on the same jobs. Contractors who fumble it get paid late, underpaid, or not at all.

Which trades benefit from insurance work

• Roofing — hail/wind damage claims are the single largest category
• Water damage / restoration — pipe bursts, flooding, mold
• Siding and exterior — wind and hail
• Tree damage / debris — falling trees, storm cleanup
• Fire / smoke restoration — specialized category, often with designated preferred-vendor relationships
• Fence and gutter — routine storm claim add-ons
• Plumbing — when a leak caused the covered water damage

Xactimate and the pricing database

Xactimate (owned by Verisk) is the dominant estimating platform for insurance claims. Most carriers require scopes in Xactimate format. You need to understand it:

• Line item pricing — Xactimate has a regional database of prices updated quarterly. Each line item has a specific code (e.g., RFG 240 for 30-year dimensional shingles).
• O&P (Overhead and Profit) — the carrier adds 10% overhead and 10% profit (“10&10”) on top of material + labor for large or multi-trade jobs. Critical that your scope qualifies for O&P.
• Supplements — line items added after initial scope for work discovered during tear-off or after adjuster mis-estimated. Supplement submission is a learned skill.
• ESX / PDF export — the data file format adjusters exchange. Having your own Xactimate license (around $125/month) lets you review and counter.

ACV vs RCV — the payment structure

Insurance payments usually come in two checks:

• ACV (Actual Cash Value): first check, issued right after claim approval. The depreciated value of the damaged property. Usually 50-75% of RCV.
• RCV (Replacement Cost Value): the full cost to replace. The carrier releases the remaining depreciation (the difference between ACV and RCV) only after the work is completed and verified.
• Deductible: the homeowner's share. Typically $1,000-$5,000. The homeowner pays this to the contractor out of pocket — and the contractor legally cannot waive or discount it (felony in many states).

Flow: ACV check → start work → submit completion → depreciation release. Homeowner pays deductible during project. Never do the work expecting to “figure out the deductible later.”

Working with adjusters (without being pushy)

The adjuster's inspection sets the scope baseline. The smart contractor is there for the inspection — but professionally:

1. Request to meet the adjuster on-site — ask the homeowner to notify you of the inspection date
2. Have your own pre-inspection done with photos and notes before the adjuster arrives
3. Walk the damage together — point out items they might miss (damaged vents, underlayment, flashing, gutters hit by the same storm)
4. Never tell the adjuster what to write — suggest, don't demand. Phrasing: “Would this flashing be covered under the same peril?”
5. Document everything with photos — your own record, even if the adjuster documents theirs
6. Build relationships — adjusters remember professionals and get frustrated by pushy contractors. Be the easy one.

Writing a scope the carrier will pay

Your scope needs to mirror the adjuster's format as closely as possible. Key principles:

• Use Xactimate codes where possible
• Detail every line item — don't lump “roof replacement $12,000.” Break into tear-off, decking, underlayment, shingles, ridge, starter, vents, flashing, debris, dumpster, etc.
• Use correct units — SQ (100 sq ft roofing squares), LF (linear feet), EA (each), HR (hours)
• Note code upgrades — jurisdictional code requirements (ice & water shield, drip edge, etc.) should be called out as code items, usually covered under Ordinance or Law endorsement
• Document before work starts — photos of every damaged area, number of hits per square on roofs, condition baseline

Supplements: how you get paid fairly

Initial adjuster estimates often miss items. Supplements are how you add them. Common supplement categories:

• Discovery items — damaged decking found during tear-off, additional damaged flashing, rotten fascia
• Code upgrades — current code requires items the old roof didn't have (ice shield, wider drip edge, ventilation to code)
• Omitted items — things the adjuster simply didn't include (pipe boots, vent caps, transition flashing)
• Price updates — material price increased between estimate and work

Submit supplements with photos, Xactimate line items, and a written explanation. Expect back-and-forth. A shop doing insurance work consistently submits supplements on 70-90% of claims.

Legal and contractual protections

Insurance work has specific legal pitfalls. Protect yourself:

• Contingency agreement — customer signs to authorize you to repair “at the price agreed upon with their carrier,” contingent on claim approval. Protects both sides.
• AOB (Assignment of Benefits) — in some states, AOBs let you receive payments directly from the carrier. Banned or restricted in Florida, Louisiana, and others. Check state rules.
• Never waive the deductible — felony insurance fraud in most states. Homeowner pays their deductible, period.
• Include right of rescission — storm- damage sales often require a 3-day cancellation window under state consumer protection law
• Don't misrepresent damage — telling a homeowner they have damage they don't is a quick path to losing your license

Cash flow considerations

Insurance work has a longer cash cycle than cash-pay:

• Claim approval — 2-6 weeks from damage report to approval
• ACV check issued — 1-3 weeks after approval
• Work starts — whenever scheduled (often 4-12 weeks after storm)
• Completion and final payment — depreciation release takes 2-6 weeks after job completion and paperwork

Plan for 60-120 days from claim to final payment. Have working capital or a line of credit to float material and labor during the gap. Many insurance-heavy contractors use factoring or carrier-specific financing programs to accelerate cash.

Insurance work mistakes

1. No Xactimate knowledge. You'll get underpaid and not know why.
2. Not attending the adjuster inspection. The scope is set at that meeting. Being absent means accepting whatever gets written.
3. Waiving the deductible to close the sale. Insurance fraud. Felony in most states. Don't.
4. No supplements. Leaving money on the table on 70-90% of claims.
5. Weak documentation. Photos, photos, photos. If you can't prove damage existed, the carrier doesn't pay for the repair.
6. Ignoring state storm-chaser laws. Texas, Colorado, Missouri, Louisiana and others have specific rules. Violations bring fines and license issues.