construction business owner education and peer group program click to learn more

The Contractor Coaching Partnership Blog

Why you cannot trust an Xactimate estimate for your insurance claim

Posted by Mark Paskell on Mon, Mar 30, 2015 @ 09:31 AM

Most of you know know that insurance companies are requiring their adjusters to use Xactimate to figure claims. Has anyone ever asked why?

There is numerous evidence that the rates carried in Xactimate are way off in most areas of the country. Material and labor prices have escalated and the software program is not accounting for these increases. As I wrote in my last blog estimates are coming in 2 to 3 times the amount carried in Xactimate. 

Who is behind the estimating program?                   xactimate roof estimating software

Well I thought you may be interested to know about who really calls the shots here. Is it any surprise that the insurance industry solution provider giant Verisk Analytics owns them?

Here is some information on the relationship between Xactimate and the Insurance Industry.

Click the article link below and see the video on the site. The information is eye opening.

Here is an article from the Property Insurance Coverage Law Blog posted by Robert Trautman.

Mr. Trautman states;

"In my last post, I discussed how Xactimate’s pricing is going down while national building material prices are going up. One theory I advanced was that insurance companies are the largest customers of Xactimate and therefore Xactware is simply giving its customers what they want. 

However, the truth is much worse than simply that. Xactware is owned by the insurance industry. Xactware is a subsidiary of Verisk Analytics. Verisk was formed to be the parent company of the Insurance Services Office (ISO) which is an organization of which the readers of this blog should be well aware. If not, ISO is the company that has unified the insurance policy forms for the insurance industry and has slowly changed the forms to narrow coverages and increase exclusions. Verisk was a privately held company owned by insurance companies up until a 2009 initial public offering. While currently a publicly held company, Verisk’s main shareholders remain insurance carriers."

Thousands of insureds in Massachusetts and contractors are dealing with low ball claim offers coming from adjusters using Xactimate.

Now that you know the insurance industry is behind Xactimate here is what you do.

Tell your homeowner client to not trust the estimate until it has been thoroughly vetted by a professional, licensed, and insured contractor who is familiar with the insurance claim process. Anyone else and they may be in for rude awakening. Let the homeowner know the insurance adjuster is usually not licensed and therefore may not be qualified to assess code related matters. The adjusters from out of state are not familiar with Mass Code requirements and need to be watched carefully. 

The home site must be completely scrutinized by this licensed professional (you) and a subsequent scope of work and pricing that itemizes all the steps that must take place to put the homeowner back to their pre-loss condition. Don't forget to check if the project triggers code upgrades and ask the homeowner if they have that coverage. Then the complete assessment needs to be discussed with the adjuster/insurance company. If there estimate is low tell them to increase it using the Xactimate custom pricing feature. If they tell you they can't change the pricing then give your estimate and say I just saved you some work. Use your estimate and scope of work for the negotiation. Remember to include everything you must do including getting the permit, mobilization costs, set up, close out and supervision.

TIP: If he tells you these things are in overhead or the cost of doing business ask him if he knows what overhead is! If he says it is in his unit price ask him to break it out and show you.

Much has been written about the problems consumers have with contractors. Some say contractors can be unprofessional, shady and unreliable. Some of that is earned.

However shouldn't we be able to trust our insurance company?

Given the recent treatment Hurricane Sandy homeowners went through with altered engineer reports and now what Massachusetts storm victim homeowners are going through (low ball estimates) who is being shady, unreliable and unfair?