- On December 5, 2020
Xactimate pricing is always a hot-button topic among contractors, and if there is one thing people agree on, it’s that labor and material costs are much lower than what they should be.
Some say it’s intentional – lower prices reduce claim totals, which benefit insurance carriers. On the other hand, Xactimate surveys 20,000 local contractors each month, collects millions of market data points, frequently publishes reports on their data, and routinely updates price points in their system. So what gives and more importantly, what can you do about it if you encounter incorrect prices?
How & Why Xactimate Is Used
The first step is understanding how incorrect use of Xactimate will lead to incorrect pricing.
In an interview with Chip Merlin on the importance of Xactimate Certifications, our Director of Investigations, Andrew Behrens, mentions that the primary cause with pricing issues are directly related to misconceptions about how to use Xactimate. Watch this short clip to learn about Xactimate’s pricing structure.
Xactimate is simply an estimating machine that breaks down the 10,000+ labor and materials associated with various types of claims into separate line items. Median market prices are used for each line item to streamline the process. According to Xactimate, median market prices provide guidance on what is most common for that area. Prices are not the end-all-be-all. Below is a screenshot from Xactimate with an explanation.
Xactimate has said that the user is responsible for making sure the prices are correct. If they are not, it’s the users’ job to update them to the proper value. Careful attention should be “paid to prices charged by contractors and suppliers. Prices will vary based upon their company’s size (overhead) and/or perceived quality of work and level of service.”
Writing A Proper Estimate
Creating an accurate estimate requires two things: (1) accurate line items selected to reflect the property damage and (2) correct pricing for those line items. If either one of those two variables (or both) is incorrect, the estimate will also be. The burden of proof to select the appropriate item and price falls on the estimator who is using the program.
Contractors choose the correct line items but fail to update any of them with the proper pricing for the job. This leads to an estimate that is well below what it costs to do the job.
Updating Info Using “Open For Inspection”
Using the “Open for Inspection” tool in Xactimate allows users to “drill down” to view—and edit if they have authorization— each line item price in Xactimate.
Instructions on how to use this feature are here.
Remember, just because you can edit each price doesn’t mean you should. It would be best if you also substantiated price updates with accurate data.
Questions For Carrier Adjusters
We have heard from many contractors that entering valid pricing information is half the battle – getting carrier adjusters to accept price increases can be a challenge. In most cases, the only way to do this is to substantiate your claim with documentation. Xactimate provides this through screenshots or bulletins they have posted.
Our white papers can also be sent to carriers to substantiate updates in Xactimate.
If a carrier adjuster isn’t accepting a valid price increase and you have provided additional documentation, look up the adjuster through Xactware’s certification directory. This will help determine if they have the skillset to understand the information you have provided.
Chances are they do not have the proper training or certification to use Xactimate. We recommend asking the adjuster to clarify their knowledge of the program or request a more skilled adjuster to review the claim.
Why Xactimate Certification Is Critical
It used to be that roofers and contractors could be self-taught in the program and “get by” without formal training or completing the certification process. With states adding additional regulations and limitations through UPPA laws, this is no longer the case. Contractors of all types must be smarter than carrier adjusters and have the certifications to prove it.
If you have to battle it out with carrier adjusters for proper payment, it is likely time you get certified.
C3’s VP of Operations, Andrew Behrens, is 1 of 48 Certified Xactimate Trainers in the country. He has developed a proprietary, self-paced virtual training platform to help with certification. Find out more here.