The Xactimate Opening Statement is one of the most overlooked and under-utilized tools in the Restoration estimator’s tool box.
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The opening statement is your first best opportunity to introduce your client to the claims process. Properly written, an opening statement sets the tone of the rest of the claim.
Why do so many folks overlook the importance of opening statements? I believe it’s because a lot of people don’t understand what an Xactimate estimate really is. They think it’s just another step in the process of doing work as a restoration contractor.
They treat it as a flexible, fuzzy document that somehow gets them the money they need to do the work they really came here to do. This lack of seriousness when it comes to Xactimate estimates is why some of you are not experiencing the success that you could.
Xactimate Equals Revenue
As I’ve mentioned before, the Xactimate estimates you write are EQUAL to your company’s revenue. Think about it; have you ever settled a claim for less than the Xactimate estimate? If the entire revenue of your company is dependent upon the estimates your write, shouldn’t those estimates be taken very seriously?
I teach my clients that the Xactimate estimate is an official claim document. It is used as a legal document in a contract negotiation between two parties: the insurance company and your client. Once your estimate is accepted by your client, the insured, the insurance company must consider it as part of the claim file. Any changes must be made with the utmost seriousness and detailed accountability.
That’s why most adjusters and TPA’s ask you NOT to show your estimate to your client. Until your client accepts it, the carrier can beat you up all they want. It’s just an opinion at that point. They don’t have to take the estimate, or you, seriously yet.
That also happens to be the reason I tell my consulting and coaching clients to send their estimates directly to their client – the homeowner or business owner who has suffered the loss. Once that happens, the adjuster is forced to take a much more serious tack with you in regards to your estimate of damages.
This helps YOU avoid the sticky situation of being an unlicensed adjuster, trying to negotiate the claim on behalf of your client.
Xactimate Estimates are Settlement Tools
Now that you’ve got a deeper appreciation for what the Xactimate estimate is, a settlement tool, let’s give you a tool to super-charge it with a powerful Opening Statement.
The Ultimate Opening Statement I use covers a lot of bases. It allows the project manager/estimator to begin having some helpful conversations with their client. It also addresses some common trouble spots. This allows you to deepen your client relationship and avoid tricky situations which may arise later in the claims process.
I’ll give you a brief overview of the main sections.
The Price is Right
Right up front you’ll notice something that I believe most folks are shy about: the PRICE.
I don’t like to make people search through the estimate to know what the bottom line is. Isn’t that what most people want to know first anyway? Why do we hide it behind forty pages of mumbo-jumbo that the client won’t understand anyway?
Give it to them. Then you can start the conversation about how you’re going to earn it. Keep in mind, this is THEIR claim and THEIR money.
CODE, OPEN items and Scope Changes
The first three sections lay the groundwork for the concept that this estimate will change. It’s important for your client to know that this is a work in progress. There is a long road ahead and they will need your help to navigate it. See what I did there?
Insureds don’t know how to talk to their adjuster about these things. They need the help of a professional.
This also opens the door for you to start doing some fortune telling. What are the “OPEN” items? When will they be added? Will you talk to the adjuster about them? All good questions for you to answer right up front.
Overhead and Profit: The Three Trades Myth
This is a biggie. Carriers are beating the O&P horse to death these days. And if you find yourself on any TPA programs I’m afraid you’re gonna have to lose this section all together. Don’t complain to me, you’re the one that agreed to their “rules.”
Adjusters and carriers have become very adept at throwing up objections to General Contractors getting Overhead and Profit. This section is your answer: we’re charging it, so deal.
In case you didn’t realize it, the property damage repair industry is still the wild west in many regards. There are no federal or state guidelines regarding with a contractor can or cannot charge a markup on their work. The reason insurance companies are so eager to tell you “we don’t pay that” is because it’s an easy 20% to shave if the contractor happens to be uneducated on the process.
The fact is that I, along with hundreds of estimators across the country, have been writing one-trade estimates for contractors for years which include a 10% overhead and 10% profit calculation. All you have to do is stand your ground. And bill your client.
Change Orders and Credits
I used to hate it when clients would start “cherry picking” my estimates. “I’ll do my own cleaning,” and “I can paint that room,” are the most frustrating. What would happen, before I implemented this section into my opening statements, is that clients would take all the high-margin trades out of my estimate in an effort to either save money or get upgrades.
And they always seemed to do it AFTER we’d started the job.
So let’s get all that nonsense out of the way right up front. Your client needs to understand that your time as an estimator has costs involved. They need to realize that the value you bring as a company goes beyond the $1.25 a foot you’ve got for paint. There are certain sunk costs associated with contracting their job.
Talking about this first usually sets the proper understanding.
This section also lays the rules by which you agree to play. There’s nothing wrong with changes, they just need to be in writing.
The next three sections set the expectations you have for your client to follow.
Matching is a huge issue, and the contractor usually gets stuck in the middle. This is your way out.
When your client says, “This new flooring doesn’t match the existing,” you can remind them of this section. Any problem they have with matching can then be addressed with the adjuster WITHOUT you in the middle.
I do this all the time with drywall texture. Why do adjusters believe that a perfect texture match is possible 100% of the time? The reality is that there are few drywallers that can match a knock-down patch without floating out the entire continuous area.
I always tell the client that we’ll do our best to patch the affected area. If the adjuster is digging in, I say that we can’t guarantee a match, but we’ll try. (This is usually best done in writing, sent to BOTH the adjuster and the client.) When the patch doesn’t come out perfect, I let the client chew on the adjuster, not me.
The warranty section is one that you’ll probably want to talk to your owner about. I believe it’s important to set up front, but different companies have different warranty periods.
That’s it folks. If you want to super-charge your Xactimate estimates, get your hands on this opening statement today.
And if you need some instructions on how to create your own opening statement, I’ve got you covered there as well.
Also published on Medium.