Claim Guides · Reading Your Estimate
How to Read the Insurance Company’s Estimate: An Adjuster Explains Your Xactimate Line Items
The settlement estimate in your hands was written in a format designed for adjusters, not homeowners. Here’s how to read it like one of us — column by column, line by line — and where the money most often goes missing.
The moment usually goes like this. Weeks after the storm or the pipe burst, an envelope (or a portal notification) arrives: your insurer’s estimate of your loss. You open it expecting a document you can understand — and instead you get twenty pages of abbreviations, unit prices, quantity codes, and two different totals that are thousands of dollars apart. You don’t know if it’s fair. You suspect it’s low. And you can’t argue with a document you can’t read.
I’ve spent my career on the other side of that document. I’ve written more than five thousand of these estimates, and I can tell you two things right away. First: the format isn’t designed to deceive you — it’s an industry tool called Xactimate, used by the large majority of carriers and restoration contractors, and once you know its logic, it’s genuinely readable. Second: the first estimate you receive is an opening position, not a verdict. It reflects what one adjuster scoped on one day. Missing items, hidden damage, and pricing questions are routine — and the entire supplement process exists because everyone in the industry knows it.
Let’s teach you to read it.
What You’re Looking At: The Anatomy of an Xactimate Estimate
Your estimate is organized in layers. At the top: claim information — your policy number, date of loss, the price list used (more on that later), and the adjuster’s info. Then the body: your home broken into rooms or areas (“Master Bedroom,” “Roof,” “Exterior — Elevations”), each containing individual line items — one line per task or material. Then the summary pages: totals, depreciation, deductible, and the number that actually matters, your net claim payment.
Every line item follows the same structure. Here’s a simplified excerpt of what a water-loss estimate might look like:
Sample Estimate Excerpt — Master Bedroom (illustrative numbers)
| Description | Qty | Unit Price | RCV | Depreciation | ACV |
|---|---|---|---|---|---|
| Tear out wet drywall, cleanup, bag — 2′ flood cut | 38 LF | $3.85 | $146.30 | (0.00) | $146.30 |
| 1/2″ drywall — hung, taped, floated, ready for paint | 76 SF | $2.42 | $183.92 | (18.39) | $165.53 |
| Seal then paint the walls (2 coats) | 320 SF | $1.18 | $377.60 | (75.52) | $302.08 |
| Carpet — detach & relay | 140 SF | $1.02 | $142.80 | (0.00) | $142.80 |
| Baseboard — 3 1/4″ — replace | 38 LF | $4.10 | $155.80 | (31.16) | $124.64 |
Illustrative excerpt with sample pricing — your estimate’s prices vary by region and price-list date. The structure, however, is universal.
Reading left to right: Description is the task. Qty is how much, in Xactimate’s units — SF (square feet), LF (linear feet), SY (square yards), EA (each), HR (hours), DA (days). Unit Price is what the software’s price database says that task costs per unit in your region, as of a specific price-list release. And then come the three columns where your money lives.
RCV, Depreciation, and ACV: The Three Columns That Matter Most
RCV — Replacement Cost Value — is the full estimated cost to do that line of work with new materials today. Depreciation is the amount subtracted for the age and condition of what was damaged: five-year-old paint has used up part of its life, so the carrier depreciates it. ACV — Actual Cash Value — is what’s left: RCV minus depreciation.
Here is the single most financially important thing in this article. On most replacement-cost policies, the carrier pays you the ACV first — and holds back the depreciation. If your policy’s depreciation is recoverable (check your policy language and the estimate’s summary page), you are entitled to that held-back money after you complete the repairs and submit documentation — invoices, receipts, photos — usually within a stated deadline.
Note also that some line items shouldn’t be depreciated at all — labor-only activities like tear-out and detach-and-reset are commonly non-depreciable (you’ll see (0.00) in the depreciation column, as in the sample above). Depreciation rates that look aggressive — 50% on a nine-year-old roof with a 30-year shingle, for example — are a legitimate question to raise in writing.
Overhead & Profit: The Most Commonly Missing Money on the Page
Look at your summary page for a line reading “Overhead” and “Profit” — typically 10% each, often written as “10 & 10.” This is not a bonus; it’s the standard compensation for a general contractor who has to coordinate a multi-trade repair: scheduling the roofer, then the drywaller, then the painter, then the flooring crew, pulling permits, and carrying the overhead of running the job.
The widely used rule of thumb: when a repair reasonably requires three or more trades — or is complex enough that a typical homeowner would need a GC to manage it — O&P belongs in the estimate. It is also one of the most frequently omitted items on carrier estimates. If your loss touches roofing, drywall, paint, and flooring and there’s no O&P on the summary page, you’ve likely found your first supplement item. Ask the question in writing: “This repair involves [N] trades. Please explain why general contractor overhead and profit is not included.”
The Line Items Most Often Missing
After thousands of estimates written and reviewed, these are the items I see missing most often. Check your estimate against this list:
The Missing-Money Checklist
- Detach & reset. Toilets, vanities, ceiling fans, appliances that must be removed to do the work and reinstalled after. Each is a payable line.
- Content manipulation. Moving your furniture out of a room and back to perform repairs. It’s labor; it’s a line item.
- Drying equipment — enough days. On water losses, air movers and dehumidifiers are billed per unit per day. Estimates commonly include fewer days than the mitigation log shows the equipment actually ran. Your dry-out documentation is the counter-evidence (see our mitigation log guide).
- Code upgrades. If current building code requires something the old construction didn’t have, and you carry ordinance-or-law coverage, those costs are payable — and rarely appear in a first estimate.
- Debris removal and disposal. Tear-out generates debris; hauling it isn’t free.
- Protection & masking. Floor protection, plastic containment, masking for paint — small lines that add up on real jobs.
- Roof access charges. Steep-slope and high-roof charges materially change roofing labor costs and are often left off.
- Primer/sealer before paint. Water-stained or new drywall needs sealing before two finish coats. “Seal & paint” pays differently than “paint.”
- Matching quantities. If continuous flooring runs through three rooms and one is damaged, replacing only that room may leave an unmatchable result. Whether adjoining areas are owed is a policy- and state-specific question worth raising rather than assuming.
One more technical detail worth checking: the price list code on your estimate’s first page (it encodes your region and a release date). Pricing databases are updated regularly, and material costs move. An estimate written months after the loss on an old price list — or paid out long after prices rose — is a fair subject for a written question.
Your Estimate Is Short. Now What?
- Get the whole document. If you received only a summary or a check stub, request the complete line-item estimate in writing. You’re entitled to see how the number was built.
- Don’t treat the first estimate as final — and be careful what you sign. Supplements are a normal, expected part of the process. Before signing anything presented as a release or final settlement, understand what rights it waives; that’s a question for your own advisor, not the carrier.
- Build your counter-file. Contractor bids on the same scope, photos, your mitigation log, receipts. Disputes are won with documentation, not frustration.
- Submit a supplement in writing. List the missing items (start with the checklist above), the incorrect quantities, and the pricing questions. Keep every exchange in writing; polite and specific beats angry and general every time.
- Escalate deliberately if the gap remains. Options can include a re-inspection, invoking the appraisal clause in your policy (a formal dispute-resolution process most policies contain), hiring a licensed public adjuster, or consulting a property insurance attorney — especially on large losses. Your state’s department of insurance also accepts complaints.
Frequently Asked Questions
What is O&P on an insurance estimate?
Overhead and profit — usually two 10% additions — compensating a general contractor for coordinating multi-trade repairs. If your repair reasonably needs a GC (the common benchmark is three or more trades), O&P belongs on the estimate. It’s among the most frequently omitted items.
What’s the difference between RCV and ACV?
RCV is the cost to replace with new; ACV is RCV minus depreciation for age and wear. Most replacement-cost policies pay ACV up front and release recoverable depreciation after you complete repairs and submit documentation — a second check with a deadline attached.
Can I dispute the insurance company’s estimate?
Yes — and the process is built for it. Request the full estimate, gather contractor bids and documentation, submit a written supplement, and escalate to re-inspection, appraisal, a public adjuster, or an attorney if the gap persists.
Is the first estimate the final payment?
No. It’s the carrier’s opening scope based on one inspection. Hidden damage, missed items, and price changes are handled through supplements — a routine part of nearly every significant claim.
What if I already cashed the first check?
Cashing an ACV payment does not by itself end your claim in most cases — but documents you sign can. Review anything labeled “release,” “final,” or “full settlement” with care before signing, and get advice if you’re unsure what it waives.
Not sure if your estimate is fair?
DeniedClaims.net exists for exactly this moment. Explore our free guides — or get a plain-English review of your estimate from someone who has written thousands of them.
Get Your Estimate ReviewedDisclaimer: This article is general educational information based on industry experience, not legal advice, and not advice about any specific claim or policy. Insurance policies, state laws, and carrier practices differ, and the examples and figures above are illustrative only. For decisions about your specific claim — including anything you are asked to sign — consult your own policy language and, where appropriate, a licensed public adjuster or attorney in your state. Xactimate is a registered trademark of its owner; DeniedClaims.net is not affiliated with or endorsed by it or by any insurance carrier.