“What do you do again?”
It’s the inevitable question that I’ve had asked many times over the years. And it’s understandable. I work in a small niche ($210billion) of the construction world called “Restoration.” That means I help people who have suffered water and fire damage to their homes and businesses.
“There’s people who specialize in that?”
Yes, there are contractors who do nothing but restoration work. These contractors are actually my clients. I help them handle the insurance claim processing and writing damage estimates in Xactimate.
Xactimate. It’s the estimating program used by 90% of the insurance repair industry to quantify property damage and claim settlements. It’s also where I see people’s eyes start to roll back in their heads. So let me try to simplify the concept.
Insurance claims and the property damage industry is largely controlled by, you guessed it, insurance companies.
We call them “carriers” to be more precise, but you probably don’t care about that. What is important to note is that the carriers have put into place myriad layers of control systems for the sole purpose of… wait for it… saving money.
One of these controls is the standardized, and tacitly mandatory, use of the Xactimate estimating platform. While contractors are not required to use the program, those that want to get paid DO.
One great analogy is the health care industry.
If there was ever an industry dominated by insurance companies, it’s health care. In order to get paid by your HMO, PPO or whatever, your doctor has to first put everything he does “for you” into a matrix of “codes”. There’s an entire field of study called Medical Coding, and entire industries specialized in delivering “coding” services.
Every pill and procedure your doctor prescribes has a corresponding CODE in the insurance company database, and a corresponding price. Without coders, or software that codes, doctors would not get paid by insurance companies. The same is true of restoration contractors.
Xactimate is essentially a construction coding piece of software. It gives carriers and their adjusters the ability to quickly create damage estimates which are uniform in pricing and format across the nation. Half-inch drywall (DRY1/2) and two coats of paint (PNTP2) is the same in New York as it is in L.A.. The pricing database contains thousands of items from paving stones to grain silos. (yes, really)
Contractors who are on the various “preferred vendor” programs are required to use Xactimate to generate their estimates. And since most adjusters won’t deal with an estimate written in another format, even non-program contractors use it as well. Show me a doctor who doesn’t use a coding & billing program.
For restoration contractors, it’s more important to know how to write a detailed (complete) Xactimate estimate than it is to know how to build a house.
I know, someone out there is yelling at their computer screen right now, but that’s just the way I see it. It’s easy to contract out construction. It’s harder to get paid enough, or on time.
“Why should I care?”
Most likely you shouldn’t care. Only 10% of homeowners will experience a disaster of some kind every year. But if you’re one of those who do, it is important to understand the basic building blocks of insurance claims.
If you’ve had a pipe break, or decided that deep frying a frozen turkey in the kitchen was a good idea, you need to know that the amount of your claim settlement will be determined by an Xactimate estimate. [I’ll pause here a moment to let you imagine what happens when twenty pounds of frozen bird gets dropped into five gallons of boiling oil. Yes, that happens. Every… year]
Who writes the estimate and for whom they write it is very important. Is the adjuster writing it? Is the contractor writing it? Do you have a comfort level with either, trusting that they have your best interests first? Would you like to have a little more control over the process?
I thought so. That’s why we’re here.
My name is Andy McCabe. You can call me the Claim Doctor.
Also published on Medium.