The Xactimate User Manual: What It Is, Why It Matters, and How to Use It

Xactimate is the estimating software that drives virtually every property insurance claim in America. Whether you are a policyholder trying to understand an estimate, a contractor preparing a repair bid, or a claims professional building a scope — the software is at the center of the process. But few people who use Xactimate actually understand how the software works, what its user manual says, or why those details matter when money is on the line.

This guide walks through what the Xactimate user manual covers, what the software is designed to do (and what it is not), and how to use it effectively in a claims environment.

What Xactimate Is and Who Uses It

Xactimate is a property estimating platform developed by Verisk Analytics (formerly Xactware). It contains a continuously updated pricing database of labor, material, and equipment costs for virtually every component of residential and commercial construction. The database is localized — pricing is adjusted by geographic area — and updated regularly to reflect current market conditions, material costs, and labor rates.

The software is used by nearly every major participant in the property claims process:

• Insurance company adjusters— both staff adjusters and independent adjusters use Xactimate to prepare the initial estimates that determine how much the carrier pays on a claim
• Contractors and restoration companies— many contractors use Xactimate to prepare repair bids in the same format the insurance company uses, making comparisons straightforward
• Public Adjusters — licensed Public Adjusters use Xactimate to prepare independent estimates on behalf of policyholders, identifying missing line items and challenging carrier underpayments
• Appraisal panels — when a claim goes to appraisal, both the policyholder's appraiser and the carrier's appraiser typically present Xactimate estimates to the umpire
• Attorneys and litigation consultants— in disputed claims and bad faith litigation, Xactimate estimates are central evidence documents

Because Xactimate is the common language of property claims, understanding how it works — and where it breaks down — is essential for anyone involved in the process.

The Xactimate User Manual: Purpose and Location

The Xactimate user manual is the official documentation that explains how the software is intended to be used, how its pricing is structured, and what the rules are for building estimates. It is not a single booklet — it exists across several locations:

• Within the software (Help menu)— Xactimate includes built-in help documentation accessible from the application. This covers interface navigation, line item selection, sketching tools, and reporting
• Verisk/Xactware online knowledge base— Verisk maintains an online resource library with articles, tutorials, FAQs, and detailed technical documentation on pricing methodology, line item inclusions, and software features
• Xactimate University certification program— the formal training and certification curriculum developed by Verisk includes detailed instructional materials that function as an extended user manual, covering everything from basic navigation to advanced estimating techniques

Many disputes in insurance claims arise because one or both parties are not following the software's own methodology. The user manual is the authoritative source for how Xactimate is intended to work — and citing it in a dispute carries weight.

What the User Manual Covers

The Pricing Database

The heart of Xactimate is its pricing database. Every line item in the software has a price that is broken down into specific components:

• Unit of measure— what the line item is measured in (square feet, linear feet, each, per hour, etc.)
• Material cost— the cost of the materials needed for that line item
• Labor cost— the cost of the labor to install, remove, or perform the work
• Equipment cost— the cost of any equipment required for the work (this is zero for many line items but significant for others, such as heavy equipment or specialty tools)
• Combined total— the sum of material, labor, and equipment costs, representing the full unit price

The pricing database is released in versions called price lists, each tied to a specific date and geographic area. Geographic areas are identified by geographic codes(also called price list regions) — for example, “CALA1” might refer to the Los Angeles, California metropolitan area. Using the correct price list for the correct area and the correct date is fundamental to producing an accurate estimate.

Line Item Descriptions and Inclusions

Every line item in Xactimate has a description that specifies exactly what is included in the price and what is not. This is one of the most important and most frequently ignored parts of the software. The description tells you:

• What is included— the specific materials, labor steps, and activities that are encompassed by the line item's price
• What is excluded— related work that must be added as separate line items (for example, a drywall installation line item may not include texture, which requires its own line item)
• Remove line items— many repairs require removing existing damaged material before installing new material. Removal is typically a separate line item from installation
• Painting— paint is almost always a separate line item from the substrate it covers. Installing new drywall does not include priming and painting it

One of the most common disputes in claims involves the distinction between “like for like” and “upgrade” items. If your home has premium-grade materials, the estimate should use the line item that reflects that quality level — not a stripped-down, standard-grade item. Xactimate has different line items for standard, premium, and custom-grade materials. Selecting the wrong one is one of the most frequent ways insurance estimates come in low.

Overhead and Profit (O&P)

Overhead and Profit — typically 10% overhead and 10% profit, for a combined 20% on top of direct repair costs — is one of the most disputed items in property insurance claims. O&P represents the general contractor's fee for managing a repair project that involves multiple trades.

Xactimate includes O&P as a standard feature in the software. It can be applied globally to an estimate or selectively to specific line items. The user manual explains how O&P is calculated and how it is intended to be applied.

When is O&P appropriate? The standard in the industry is that O&P is owed whenever the repairs require a general contractor to coordinate multiple trades. If your claim involves plumbing, drywall, painting, and flooring — which most water damage claims do — a general contractor is typically needed to manage the project. That contractor's overhead and profit are legitimate costs of the repair.

Depreciation and ACV vs. RCV

Xactimate includes tools for calculating depreciation, which is central to the distinction between Actual Cash Value (ACV) and Replacement Cost Value (RCV). The user manual covers how depreciation is calculated within the software:

• RCV is the cost to repair or replace the damaged property with materials of like kind and quality, without deduction for depreciation
• ACVis the RCV minus depreciation — what the item is worth at the time of loss, accounting for its age and condition
• Depreciation in Xactimate is typically applied as a percentage based on the age and expected useful life of the item. The software allows the estimator to set depreciation rates for each category or line item

Whether depreciation is recoverable (you get it back after completing repairs) or non-recoverable (the carrier never pays it) depends on your policy language and state law. This is a frequent source of disputes, particularly regarding labor depreciation, where some carriers depreciate the labor component of a repair even though labor does not “wear out” the way materials do.

Xactimate Online vs. Xactimate Desktop

Xactimate is available in two primary versions:

• X1 (Desktop)— the full-featured desktop application. X1 includes the complete suite of sketching tools, advanced estimating capabilities, and integration with other Verisk products. It is the version used by most serious estimators — Public Adjusters, experienced adjusters, and large contractors
• Xactimate Online (Browser-Based)— a browser-based version that provides access to estimating functions without requiring a local installation. It is more limited than X1 in sketching and advanced features but adequate for many standard estimating tasks

The choice between versions matters because some features available in X1 — particularly advanced sketching and field tools — are not available in the online version. If you are reviewing an estimate, it is worth knowing which version was used, as this can affect the level of detail in the scope.

Xactimate Certification and What It Means

Verisk offers a formal certification program for Xactimate users, structured in three levels. Each level represents increasing proficiency with the software:

Level 1: Fundamentals

Level 1 certification covers basic functionality: navigating the interface, creating a new claim, adding line items, applying basic depreciation, and generating reports. This is the entry point for anyone who needs to use Xactimate professionally. It demonstrates that the user understands the basics of the software but does not indicate advanced proficiency.

Level 2: Intermediate

Level 2 covers sketching tools (both interior and exterior), advanced line item selection, integration with other Xactware products, and more efficient workflows. This is where most competent adjusters and estimators should be operating. Level 2 certification indicates the user can produce detailed, sketch-based estimates — not just simple line-item lists.

Level 3: Expert

Level 3 addresses complex estimating scenarios, advanced field tools, expert-level pricing and scope methodology, and the nuances of Xactimate that most users never encounter. This is the professional tier — the certification that distinguishes someone who truly understands the software from someone who can simply operate it.

Why does certification matter? For Public Adjusters, independent adjusters, and claims consultants, certification demonstrates formal training and competence with the tool that drives the industry. It is increasingly expected — and in some markets, required — for professionals who prepare estimates as part of their work.

Practical Tips for Using Xactimate Effectively

Whether you are a professional estimator or a policyholder reviewing an estimate, these practical guidelines will help you get more out of the software:

1. Always use the current price list for the correct geographic area. An outdated price list or a price list from a different region will produce incorrect pricing. Verify the price list date and geographic code on every estimate you review.
2. Read line item descriptions carefully. Every line item has a description that tells you what is included and what is not. If you do not read the description, you will miss related items that need to be added separately.
3. Do not rely solely on Xactimate for specialty items. Xactimate prices common construction items well, but it may not accurately price specialty materials, custom work, or items that are not in the database. For these, get actual bids from qualified contractors and add them as manual line items.
4. Use the Notes field to document the basis for your selections. When you choose a specific line item, note why you selected it. This creates a record that supports your estimate in negotiations or appraisal.
5. Retain the native Xactimate format (.ESX), not just the PDF.The .ESX file contains all the data behind the estimate — line items, pricing details, notes, sketches, and settings. A PDF is a flat document that cannot be analyzed line by line. Always request and retain the .ESX file.
6. Understand that Xactimate is a pricing tool, not a scope development tool. Xactimate prices whatever you tell it to price. It does not tell you what damage exists or what repairs are needed. That is the job of a qualified inspector who physically examines the property.

Why This Matters for Policyholders

If you have received an Xactimate estimate from your insurance company and the number seems low, the user manual is part of the answer. The software has rules. It has a methodology. And when the carrier's adjuster departs from those rules — whether by using the wrong price list, omitting line items, stripping overhead and profit, or selecting stripped-down materials when your home has premium finishes — that departure can be identified and challenged.

A qualified Public Adjuster who is proficient in Xactimate can review the carrier's estimate line by line, identify what is missing, correct what is wrong, and prepare a competing estimate that reflects the actual cost of restoring your property. That competing estimate — built in the same software, using the same pricing database — is the most powerful tool a policyholder has in a claim dispute.

Disclaimer

This article is for educational purposes and is not legal advice. Xactimate is a proprietary product of Verisk Analytics, and specific features, pricing, and certification requirements may change over time. For advice specific to your claim, consult with a licensed professional in your state.

Written by Leland Coontz III, Licensed Public Adjuster, CA License #2B53445