How to Challenge an Xactimate Estimate: A Step-by-Step Guide

A practical guide for policyholders, public adjusters, and attorneys on identifying errors in an insurance carrier's Xactimate estimate and building an effective challenge.

You just received the insurance company's estimate for your fire-damaged kitchen. The adjuster was polite, spent forty-five minutes in your home, and told you the company would "take care of everything." Two weeks later, an envelope arrives. Inside is a dense, multi-page document full of codes, line items, and numbers that might as well be written in another language. The bottom line says $38,000. Your contractor says the job is $67,000. The gap between those two numbers is not a rounding error — it is the difference between a proper repair and a half-finished project that leaves your family in a home that was never fully restored.

That estimate was almost certainly produced using Xactimate, a software platform made by Verisk (formerly Xactware Solutions). And while there is nothing inherently wrong with Xactimate as a tool, the way it is used — and misused — by insurance carriers has turned it into one of the most effective mechanisms for systematically underpaying property insurance claims in the United States.

This guide will walk you through what Xactimate actually is, what it is not, and how to identify and challenge the errors that may be costing you tens of thousands of dollars.

What Xactimate Is — and What It Is Not

A Tool, Not an Authority

Xactimate is estimating software. It is a program that allows a user to input measurements, select materials, choose labor categories, and generate a cost estimate for construction and repair work. It is used by insurance carriers, independent adjusters, public adjusters, contractors, and restoration companies across the country.

What Xactimate is notis an oracle. It does not independently determine the cost of your repair. It does not assess damage. It does not interpret your insurance policy. It does not decide what is owed. Every single number on an Xactimate estimate is the product of choices made by the person who created it — the adjuster, the desk reviewer, or the estimator sitting in a cubicle who may never have set foot on your property.

The adjuster chose the measurements. The adjuster chose the line items. The adjuster chose the labor efficiency setting. The adjuster chose whether to include overhead and profit. The adjuster chose the material specifications. Every one of those choices directly affects the bottom line, and every one of them can be wrong.

Garbage In, Garbage Out

Xactimate operates on a simple principle that applies to all software: the output is only as reliable as the input. If the adjuster measured your roof at 22 squares when it is actually 28 squares, Xactimate will faithfully generate an estimate that is short by six squares of roofing. If the adjuster selected "builder-grade laminate" when your kitchen had custom tile, Xactimate will price builder-grade laminate. The software does not know the difference. It does what it is told.

This is precisely why challenging an Xactimate estimate is not a matter of arguing with a computer. It is a matter of examining the human decisions that went into the estimate and identifying where those decisions were wrong.

The Policy Controls, Not the Software

Nothing in a standard homeowners insurance policy — whether it is an HO-3, HO-5, or any other form — references Xactimate or authorizes an insurer to limit its obligations to whatever figure a third-party software program generates. The policy is the contract. The policy defines what is covered, how losses are valued, and what the insurer owes. As one commentator put it plainly: "Xactimate is not the law."

Under California law, the measure of recovery for a covered property loss is the amount it would cost to repair or replace the damaged property to its pre-loss condition. (Cal. Ins. Code § 2051; Cal. Ins. Code § 2051.5.) The carrier cannot satisfy this obligation by pointing to a software-generated number that does not actually reflect what the repair will cost.

The Xactimate EULA: An Admission Most Adjusters Have Never Read

One of the most powerful tools available when challenging an Xactimate estimate is the very document that governs the use of the software itself: the End User License Agreement (EULA).

What the EULA Actually Says

The Xactware EULA, published by Verisk at verisk.com/privacy-policies/xactware-eula, contains language that directly undermines the way carriers present their Xactimate estimates as authoritative statements of repair cost.

Section 12.3 of the EULA states plainly: "We do not warrant the accuracy of pricing information in the Price Data."

Read that again. The company that makes Xactimate — the company that maintains the pricing database — does not guarantee that its prices are accurate.

The EULA further clarifies that Xactimate pricing is "intended to represent historical information and should be used as a baseline or place to begin creation of an estimate." In other words, Verisk itself describes its prices as a starting point, not a final answer.

The EULA also acknowledges that local market conditions may vary from the prices contained in the database. This is a significant admission. It means that even when the software is used correctly, the prices it generates may not reflect what repairs actually cost in your specific market.

Why This Matters

When a carrier presents its Xactimate estimate as the definitive word on what your repair should cost, it is representing the output of a tool whose own manufacturer says the prices are not guaranteed, are based on historical data, and may not reflect local market conditions. This creates a powerful argument — both in negotiation and in litigation — that the carrier cannot hide behind Xactimate to justify an underpayment.

When challenging an estimate, consider printing the relevant sections of the EULA and attaching them to your written demand. It is difficult for an adjuster to argue that Xactimate prices are gospel when Verisk itself says otherwise.

The RIA Advocacy on EULA Language

The Restoration Industry Association (RIA) has actively engaged with Verisk over EULA language, successfully advocating for the restoration of key disclaimers that clarify Xactimate prices are not definitive market values and that users should adapt prices based on actual market conditions related to a particular job. This history of advocacy further demonstrates that the industry itself does not regard Xactimate pricing as final or authoritative.

Common Errors to Look For

When you receive a carrier's Xactimate estimate, treat it like opposing counsel's brief: read it carefully, assume nothing, and check everything. Below are the most common categories of errors.

1. Wrong Labor Efficiency Settings

This is one of the most consequential — and least understood — errors in carrier estimates. Xactimate allows the estimator to select different labor efficiency settings that dramatically affect pricing across every labor line item in the estimate.

The key settings include:

• Restoration/Service/Remodel: This setting reflects the reality of repair work — jobs that involve drive time, mobilization costs, material delivery to an occupied structure, reduced productivity due to working around existing finishes and contents, and the inherent inefficiency of restoration and remodeling work. This is the appropriate setting for the vast majority of insurance repair claims.
• Large Restoration/Remodel: A newer setting introduced by Verisk, positioned between the standard Restoration/Remodel and Total Rebuild settings. This setting reduces labor pricing by approximately 5-10% compared to the standard Restoration/Remodel setting. It is designed for larger projects that are more accessible but still involve the complexities of restoration work.
• Total Rebuild or Similar: This setting reflects new construction efficiency — large-scale work on unoccupied structures where crews have unrestricted access, can schedule freely, and operate at maximum productivity. This setting produces the lowest labor costs.

Here is the problem: when a carrier's adjuster selects "Total Rebuild" or even "Large Restoration/Remodel" for a project that is actually a restoration or repair job in an occupied home, every single labor line item in the estimate is reduced. The cumulative effect can undervalue the labor component of the entire estimate by 15-30%. On a $60,000 repair, that is $9,000 to $18,000 that disappears from the estimate with a single setting change.

As Verisk's own documentation states, estimators must use "their experience, skill, and knowledge to determine appropriate items, labor efficiency, and pricing." The choice of labor efficiency setting is a judgment call — and it is a judgment call that can be challenged.

What to do: Check the labor efficiency setting on the carrier's estimate. It is typically shown in the estimate parameters or profile settings. If it is set to anything other than Restoration/Service/Remodel for a standard repair job, flag it immediately.

2. Missing Line Items

This is the most straightforward category of error, and often the most significant in dollar terms. The adjuster simply did not include work that needs to be done.

Common examples include:

• Failure to scope adjacent or related damage (e.g., water damage to framing behind fire-damaged drywall)
• Omitting detach-and-reset items (removing and reinstalling fixtures, appliances, or trim that must be moved to complete the repair)
• Ignoring protection of adjacent surfaces during construction
• Failing to include content manipulation (moving furniture and belongings to access repair areas)
• Omitting cleaning, HVAC duct cleaning, or odor remediation
• Leaving out temporary housing or additional living expenses during repairs

What to do: Walk the property with a qualified contractor or public adjuster and create a comprehensive scope. Compare it line by line against the carrier's estimate. Every missing item should be documented and included in your supplemental demand.

3. Wrong Measurements

Measurement errors are surprisingly common, particularly when the carrier's adjuster used Xactimate's sketching tools without adequate field verification or relied on aerial imagery for roof measurements.

Common measurement errors include:

• Roof area understated (failing to account for waste, pitch factor, or complex geometry)
• Room dimensions that do not match actual measurements
• Linear footage errors on trim, baseboards, or crown molding
• Failure to measure areas that are difficult to access

What to do: Take your own measurements. For roofs, obtain a professional measurement report (companies like EagleView and GAF QuickMeasure provide aerial measurement services, or measure the roof yourself). For interiors, measure every room. Compare your measurements against the carrier's sketch.

4. Missing Overhead and Profit (O&P)

Overhead and profit — typically 10% overhead and 10% profit, applied to the total estimate — represent the general contractor's compensation for managing, coordinating, and supervising the project. Carriers routinely omit O&P from their estimates, and the fight over O&P is one of the most common disputes in property insurance claims.

This issue is significant enough that it warrants its own section below.

5. Incorrect Material Specifications

Xactimate contains thousands of line items for different materials at different quality levels. When the carrier's adjuster selects a lower-grade material than what was actually installed in your property, every affected line item is underpriced.

Common examples include:

• Using builder-grade carpet pricing for high-end or custom carpet
• Selecting standard three-tab shingle pricing when the roof had architectural or designer shingles
• Pricing standard ceramic tile when the home had natural stone or custom tile
• Using stock-grade cabinetry pricing for semi-custom or custom cabinets
• Selecting standard plumbing fixtures when the home had high-end fixtures

Under California law, the insurer's estimate must be "of an amount which will restore the damaged property to no less than its condition prior to the loss." (10 CCR § 2695.9(a)(1)(B).) If your home had custom finishes, the estimate must reflect the cost of custom finishes — not the cheapest alternative the adjuster can find in the Xactimate database.

What to do: Document what was actually in your home before the loss. Photographs, receipts, contractor records, and homeowner testimony all serve as evidence of pre-loss condition. For each material that is mispriced, identify the correct Xactimate line item or provide actual pricing from suppliers.

6. Depreciation Errors

For claims paid on an actual cash value (ACV) basis — which is usually the initial payment, even under a replacement cost policy — the carrier will deduct depreciation from the estimate. Depreciation errors are extremely common and take several forms:

• Depreciating items that should not be depreciated: Labor, for instance, does not wear out over time. Some carriers depreciate labor costs alongside material costs, effectively double-dipping. Many jurisdictions, including California, do not permit depreciation of labor. (See Essa v. Security Ins. Co. of Hartford, Cal. Ct. App. 2024, holding that labor costs may not be depreciated under California law.)
• Using incorrect useful life figures: Xactimate allows the adjuster to set the useful life for materials. If the adjuster assigns a 15-year useful life to a roof that has a 30-year manufacturer warranty, the depreciation will be roughly double what it should be.
• Applying depreciation uniformly: Not all components of a repair depreciate at the same rate. A 20-year-old home may have a roof that is near end of life but cabinets that are in excellent condition. Blanket depreciation percentages ignore these differences.
• Failing to account for maintenance: A well-maintained component depreciates more slowly than one that has been neglected. The condition of the item at the time of loss matters.

What to do: Review every depreciation line in the estimate. Check the useful life assigned to each category. Verify that labor is not being depreciated. Compare the depreciation percentages against industry standards and the actual condition of the property.

7. Missing Code Upgrades

When a property is repaired, the work must comply with current building codes — not the codes that were in effect when the home was originally built. If the building code has changed since original construction, the cost of bringing the repaired areas up to current code is an additional expense that should be reflected in the estimate.

Common code upgrade items include:

• Electrical upgrades (GFCI outlets, arc-fault breakers, updated panel requirements)
• Plumbing upgrades (water heater strapping, backflow prevention)
• Energy code compliance (insulation requirements, window specifications, HVAC efficiency standards)
• Structural upgrades (seismic bracing, hurricane straps in applicable areas)
• Fire safety upgrades (smoke detectors, fire sprinklers in some jurisdictions)

Most homeowners policies include Ordinance or Law coverage (sometimes called Code Upgrade coverage) as an endorsement, providing additional coverage — typically 10%, 25%, or 50% of the dwelling limit — specifically for code-mandated upgrades. Yet carriers routinely fail to include code upgrade costs in their estimates.

What to do: Have your contractor or a code consultant identify all applicable code changes since original construction. Prepare a separate code upgrade estimate in Xactimate. Submit it under the Ordinance or Law endorsement.

8. Wrong Geographic Pricing

Xactimate uses pricing databases that are updated monthly and organized by geographic region, typically by ZIP code. The prices are based on surveys of labor and material costs in specific areas.

Errors occur when:

• The estimate uses the wrong ZIP code
• The pricing database does not reflect actual costs in your market (particularly after catastrophic events when demand drives prices up)
• The carrier uses pricing from a lower-cost region

California's Fair Claims Settlement Practices Regulations require that the insurer "take reasonable steps to verify that the repair or rebuilding costs utilized by the insurer or its claims agents are accurate and representative of costs in the local market area." (10 CCR § 2695.9(d).) If the carrier's Xactimate pricing does not match what local contractors actually charge, the carrier is not meeting this standard.

What to do: Check the ZIP code on the carrier's estimate (it appears in the estimate profile). Compare Xactimate's unit prices against actual bids from local contractors. After catastrophic events, document market pricing with multiple contractor bids to demonstrate that Xactimate's database has not kept pace with actual costs.

The O&P Fight

When Overhead and Profit Is Owed

The dispute over general contractor overhead and profit is one of the most common — and most consequential — battles in property insurance claims. O&P typically adds 20% to the base estimate (10% overhead + 10% profit), so the carrier has a significant financial incentive to deny it.

Verisk's own white paper on overhead and profit, published at verisk.com, makes clear that general overhead expenses are not included in Xactimate's unit pricing. These costs — which include a contractor's general and administrative expenses, office rent, utilities, office staff salaries, insurance, licensing, and advertising — are separate from the line-item prices in the estimate and must be added to reflect the actual cost of a contractor performing the work.

The general standard for when O&P is owed is this: when a general contractor is reasonably likely to be needed to coordinate and complete the repair, O&P must be included in the estimate.

The "Three Trades" Benchmark

A commonly referenced benchmark — sometimes called the "three trades rule" — holds that when a repair requires the coordination of three or more trades (e.g., a roofer, an electrician, and a drywall contractor), a general contractor is reasonably necessary to manage the project, and O&P is therefore owed.

While this benchmark has been widely used in the industry, it is important to understand that it is a guideline, not a legal standard. The actual legal test, as articulated in several key decisions, is whether the use of a general contractor is "reasonably likely":

• In Trinidad v. Florida Peninsula Insurance Co.(Fla. 2013), the Florida Supreme Court held that general contractor overhead and profit is "a necessary component" of an insurer's obligations under a replacement cost policy, and that it must be paid "where it is reasonably likely a general contractor would be needed." The court explicitly declined to adopt a rigid "three trade" rule.
• In Windridge of Naperville Condo. Ass'n v. Philadelphia Indemnity Insurance Co. (N.D. Ill. 2017), the court held that if a general contractor is required to repair or replace the damaged property, the insurer must pay the overhead and profit components of the general contractor's charges.

The Carrier's Argument — and Why It Fails

• "The policyholder hasn't hired a general contractor yet." This argument confuses the question. Under a replacement cost policy, the insurer must pay what it will cost to repair the property. If a GC is reasonably necessary, the cost includes O&P — regardless of whether the policyholder has signed a contract yet.
• "The policyholder can hire the trades directly." Most homeowners are not qualified to act as their own general contractor, and they should not be expected to. The cost of repair includes the cost of professional coordination.
• "The job only involves two trades."Even if a project involves fewer than three trades, a general contractor may still be reasonably necessary depending on the complexity of the work, the need for permits and inspections, and the policyholder's ability to manage the project.

What to do: If the carrier's estimate omits O&P and your repair involves multiple trades or any significant complexity, demand that O&P be added. Cite Verisk's own documentation acknowledging that general overhead is not included in line-item pricing. Provide your general contractor's bid showing O&P as a separate line item.

How to Build Your Challenge

Step 1: Get the ESX File

The first and most critical step is requesting the carrier's native Xactimate file — the ESX file — not just the PDF printout.

An ESX file is a compressed archive that contains the complete estimate, including the sketch, all line items, notes, photos, estimate parameters, labor efficiency settings, and any internal comments the adjuster may have entered. A PDF printout may obscure or omit much of this information.

You have a right to receive the documents upon which the carrier's settlement is based. Under California's Fair Claims Settlement Practices Regulations, "if losses are settled on the basis of a written scope and/or estimate prepared by or for the insurer, the insurer shall supply the claimant with a copy of each document upon which the settlement is based." (10 CCR § 2695.9(b).) The ESX file is the document — the PDF is merely a printout of it.

Put your request in writing:

"Please provide a copy of the native Xactimate file (.ESX format) for claim number [X], including all associated sketches, notes, photographs, and estimate parameters. A PDF printout is not sufficient, as it does not contain the complete data necessary for a thorough review of your estimate."

If the carrier refuses to provide the ESX file, document the refusal. It may become relevant in a bad faith context.

Step 2: Conduct a Line-by-Line Comparison

Once you have the carrier's ESX file, import it into your own copy of Xactimate (or have your public adjuster or estimator do so). Then create your own estimate of the same loss and compare the two line by line.

For each discrepancy, document:

• The specific line item code
• The carrier's quantity and unit price versus your quantity and unit price
• The reason for the discrepancy (wrong measurement, missing item, wrong material, wrong labor setting, etc.)
• The dollar impact of the discrepancy

This comparison becomes the foundation of your written challenge.

Step 3: Document Market Pricing

Xactimate pricing is based on historical survey data. It may not reflect current market conditions, particularly after catastrophic events when labor and material costs spike.

Obtain actual bids from licensed, local contractors. These bids serve two purposes:

1. They demonstrate the actual cost of repair in the local market.
2. They provide independent evidence that the carrier's estimate is insufficient.

Under 10 CCR § 2695.9(d), the carrier is required to verify that its repair costs are "accurate and representative of costs in the local market area." If actual contractor bids consistently exceed Xactimate pricing, the carrier's estimate does not meet this standard.

Step 4: Reference Verisk's Own Documentation

Verisk publishes white papers and documentation on its pricing methodology, labor efficiency settings, overhead and profit, and depreciation. These documents are publicly available and can be used to hold the carrier accountable for how it uses the software.

Key Verisk resources include:

• Overhead and Profit White Paper: Confirms that general overhead is not included in unit pricing
• Labor Efficiencies Design Document: Explains the different labor efficiency settings and when each is appropriate
• Labor Productivity in Xactimate Pricing: Details how labor rates are calculated
• Xactimate Pricing Methodology Summary: Describes how prices are surveyed and updated

When a carrier misuses a setting or misapplies Xactimate's methodology, Verisk's own documentation becomes evidence against the carrier's position.

Step 5: Present Your Challenge in Writing

Always — always — present your challenge in writing. Phone calls are useful for building rapport and understanding the adjuster's position, but they are not a substitute for a written demand that creates a clear record.

Your written challenge should include:

1. A summary of the claim and the carrier's current estimate
2. Your revised estimate (in Xactimate format, if possible)
3. A line-by-line comparison identifying each discrepancy
4. Supporting documentation (contractor bids, measurements, photographs, material specifications)
5. Reference to applicable law and regulations
6. A specific dollar demand
7. A reasonable deadline for response

Send your challenge via email with delivery confirmation, or via certified mail. Keep copies of everything.

What to Do When the Carrier Will Not Budge

You have submitted a detailed, well-documented challenge. The carrier has responded with a form letter reaffirming its original estimate, or worse, has not responded at all. What now?

Invoke the Appraisal Clause

Most property insurance policies contain an appraisal clause that provides a mechanism for resolving disputes over the amount of a loss. Under California Insurance Code Sections 2070-2071, standard fire insurance policies must include an appraisal provision.

The appraisal process works as follows:

1. Either party (you or the insurer) demands appraisal in writing.
2. Each party selects an independent appraiser.
3. The two appraisers attempt to agree on the amount of loss.
4. If they cannot agree, they select a neutral umpire.
5. Agreement by any two of the three (both appraisers, or one appraiser and the umpire) is binding.

Appraisal has several advantages:

• It is faster and less expensive than litigation.
• It is binding, which means the carrier cannot simply ignore the result.
• It is focused exclusively on the amount of loss, which is exactly what an Xactimate dispute involves.

However, appraisal has limitations. It addresses only the amount of the loss — not coverage questions, policy interpretation, or bad faith. And the parties must have made a genuine effort to resolve the dispute before invoking appraisal.

Important: Select your appraiser carefully. Choose someone with deep experience in Xactimate estimating and construction costs, not just a licensed appraiser who primarily handles real estate valuations. The appraiser you select will be your advocate in the process.

File a Department of Insurance Complaint

In California, you can file a complaint with the California Department of Insurance (CDI) online at insurance.ca.gov or by calling the consumer hotline at 1-800-927-4357.

A CDI complaint triggers a formal review. The department forwards your complaint to the insurer, which is required to respond with an explanation and supporting documentation. The CDI evaluates whether the insurer's conduct complied with California's Fair Claims Settlement Practices Regulations.

A CDI complaint is particularly effective when the carrier's conduct violates specific regulatory requirements, such as:

• Failing to provide a copy of the estimate upon which settlement is based (10 CCR § 2695.9(b))
• Using repair costs that are not representative of the local market (10 CCR § 2695.9(d))
• Failing to provide a reasonable explanation for denying or reducing a claim (10 CCR § 2695.7(b)(1))
• Failing to accept or deny a claim within 40 days of receiving proof of claim (10 CCR § 2695.7(b))

While the CDI does not adjudicate individual claims, a substantiated complaint creates a regulatory record that can be valuable in subsequent proceedings.

Understand the Bad Faith Implications

When a carrier refuses to adjust an estimate that contains demonstrable errors — wrong measurements, inappropriate labor settings, missing line items, omitted O&P — the refusal raises questions that extend beyond the amount of the claim.

Under California law, every insurance policy includes an implied covenant of good faith and fair dealing. (Cal. Ins. Code § 790.03(h); Egan v. Mutual of Omaha Ins. Co., 24 Cal.3d 809 (1979).) A carrier that knowingly relies on a flawed estimate to underpay a claim — or that refuses to correct known errors — may be exposing itself to a bad faith claim, which can result in damages far exceeding the original claim value.

California's Unfair Insurance Practices Act (Cal. Ins. Code § 790.03(h)) identifies specific practices that constitute bad faith, including:

• Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear
• Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds
• Failing to promptly provide a reasonable explanation of the basis in the insurance policy for the denial or offer of a compromise settlement

The significance of these provisions in the Xactimate context cannot be overstated. When a carrier's own estimating tool contains settings and parameters that produce a lower number based on choices that do not match the facts of the loss, and the carrier refuses to correct those choices when confronted with evidence, the carrier's conduct begins to look less like a good-faith disagreement over value and more like a systematic practice of underpayment.

For attorneys evaluating these claims, the discovery phase can be particularly revealing. Requesting the carrier's internal guidelines for Xactimate settings, training materials for adjusters, and any directives regarding labor efficiency, O&P, or depreciation can illuminate whether the errors in a particular estimate are isolated mistakes or reflections of company-wide practices.

Litigation

When negotiation, appraisal, and regulatory complaints have not resolved the dispute, litigation remains available. In California, a policyholder can bring a breach of contract claim for the unpaid benefits and a tort claim for breach of the implied covenant of good faith and fair dealing.

A bad faith action allows recovery of:

• The full contract damages (the unpaid claim benefits)
• Consequential damages (costs incurred as a result of the underpayment)
• Emotional distress damages
• Punitive damages (in cases of particularly egregious conduct)

In Egan v. Mutual of Omaha, the California Supreme Court upheld an award of $5 million in punitive damages against a carrier that failed to conduct a thorough, unbiased investigation before denying a claim. While not every Xactimate dispute rises to that level, the case illustrates the potential consequences when a carrier's claims handling falls below the standard of good faith.

Practical Tips for Policyholders

1. Do not accept the first estimate without review.The carrier's initial estimate is a starting point, not a final offer — even if the carrier presents it as one.
2. Hire a public adjuster or an attorney early.If the gap between the carrier's estimate and actual repair costs is significant, professional representation often pays for itself many times over.
3. Document everything. Photograph damage before any repairs. Keep every communication with the carrier. Save every version of every estimate. Maintain a written log of every phone call, including the date, time, and the name of the person you spoke with.
4. Do not sign a release or accept a "final" payment without understanding what you are giving up. Some carriers will issue a payment with language suggesting it is "full and final settlement." Cashing that check may not waive your rights, but it is better to address the language before depositing the funds.
5. Understand recoverable depreciation.If you have a replacement cost policy, the carrier's initial payment is typically actual cash value (replacement cost minus depreciation). You are entitled to recover the depreciation once repairs are completed. Do not leave this money on the table.
6. Get multiple contractor bids. Three bids from licensed, local contractors provide strong evidence of actual market pricing and make it much harder for the carrier to argue that its Xactimate estimate reflects reality.
7. Know your policy. Read your declarations page and your policy form. Understand your coverage limits, your deductible, your Ordinance or Law coverage, and your appraisal clause. Knowledge of your own policy is your most basic and most important tool.

A Note for Attorneys

If you are representing a policyholder in a property insurance dispute, the Xactimate file is one of the most important pieces of evidence you can obtain.

In discovery, request:

• The native ESX file(s) for every version of the carrier's estimate
• The carrier's internal Xactimate guidelines and estimating standards
• Training materials provided to adjusters regarding Xactimate settings
• Any corporate directives regarding labor efficiency settings, O&P, depreciation methodology, or material specifications
• The adjuster's field notes, photographs, and measurements
• Any internal communications referencing the estimate or the claim

The ESX file will reveal not only the line items and prices but also the estimate parameters, profile settings, labor efficiency selections, and any notes or comments entered by the adjuster. These details are often not visible on the PDF printout and can provide critical evidence of how and why the estimate was constructed the way it was.

Pay particular attention to whether the carrier's estimating practices are consistent across claims. If you can demonstrate that the carrier systematically uses labor efficiency settings, depreciation methodologies, or O&P exclusions that undervalue claims as a matter of corporate practice, you may have a basis for a broader bad faith claim and, potentially, class-wide relief.

Conclusion

An Xactimate estimate is not a verdict. It is a document created by a person who made choices — about measurements, materials, labor, overhead, depreciation, and code compliance — that may or may not be correct. The software itself does not guarantee accuracy. Its own manufacturer says so in the EULA.

When you receive an Xactimate estimate from your insurance carrier, you have every right to examine it, question it, and challenge it. The tools are available: request the ESX file, compare it against your own estimate, document actual market costs, and present your challenge in writing. If the carrier will not budge, invoke appraisal, file a regulatory complaint, or pursue litigation.

The gap between the carrier's estimate and the actual cost of repair is not a matter of opinion. It is a matter of facts — facts that can be identified, documented, and proven. The carrier may have Xactimate on its side, but you have the policy, the law, and the truth about what your repair actually costs.

This article is for informational purposes only and does not constitute legal advice. If you believe your insurance claim has been underpaid, consult with a licensed public adjuster or an attorney experienced in insurance coverage disputes.