How To Read An Xactimate Estimate

An Xactimate estimate is a detailed insurance estimate used to assess the extent of damage after a loss. It outlines the specific items that need repair and includes line items that break down costs for everything involved, such as labor, disposal, and materials. Homeowners, insurance adjusters, and contractors all depend on these estimates to guide the restoration process, as they provide a clear and accurate understanding of the necessary work and costs. In this guide, we will walk you through the process of how to read an Xactimate estimate.

We’ll break down each section, explain the terminology, and describe each part’s role, components, and importance so you can fully understand how the estimate works and what it represents.

What Is An Xactimate Estimate?

Xactimate is the most commonly used software for estimating claims in North America’s insurance and restoration industries. An estimate created with Xactimate breaks down all the materials and labor required to finish a restoration job.

Typically, each estimate is created to match a specific phase of a job or claim. For instance, you might write one estimate for the emergency services and another for the reconstruction services.

Inside the software, you can create a sketch that maps out each room of the property. Then, for each room, you can list the estimated line items that show the work already done or the work that needs to be done. This estimate serves as a reference for everyone involved in the claim, such as the adjuster, the insurance company, the restoration contractor, and the homeowner, helping them understand the scope of work and what is included or excluded.

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Sections Of An Xactimate Estimate

An exact estimate comprises a cover page, a summary, a sketch, and itemized line items representing the project or work.

1. General Information

General information is present at the top of the estimate, like the type of estimate, name of the insured party, property address and location, claim number, date of the estimate, and the price list used. Let’s see it as follows:

2. Price List

The price list is used to determine the cost of each factor. It considers the geographical area, the cost of material in that location, and the time and date of the estimate created. Usually, the price list follows this way: Name of the geographical region, state, and the price version they use within the Xactimate. Generally, 8X is the version primarily used in the Xactimate estimate. If you see something other than 8X, they are using a variable or customized price list, followed by the month and year it was created.

For example, if you see OHCO8X_JAN25, it would translate to the region Ohio and Columbia with the date in January 2025. You can find this price list at the top of the estimate.

3. Line Items

In an insurance estimate, a line item is a specific entry that details an individual task, material, or service required for restoration services. Each line item provides information on the type of work, the quantity needed, the unit cost, and the total cost for that particular item.

For example, in a water damage restoration estimate, line items might include costs for water extraction, dehumidifier rental, drywall removal, carpet removal, or antimicrobial treatments. Each task would have its line item detailing the price per square foot or hour of labor, making the price clear for each item. This itemization is essential for accurately assessing the total value of the restoration work and ensuring that each aspect is accounted for within the estimate or invoice.

4. Pricing Structure and Units

Line items pair with quantities, units, and rates that reflect the project scope.

5. Making Changes To Pricing

The Xactware end user agreement license notes that Xactware does not warrant the accuracy of pricing information in the Price Data and that users agree not to prohibit or preclude deviations from the Price Data where contractor requirements, market conditions, demand, or any other factors warrant the use of a different line item price in a specific situation.

Simply put, where Price Data in the Xactware pricelist differs from your actual cost, Xactimate allows you to change the line item price.

There are a number of ways to show the quantity on an Xactimate estimate. It can be measured in square feet, the supervision in labor hours, and the monthly scaffolding.

Understanding Terms and Codes

Here we have provided an extensive understanding of different codes, terms, variables and costs within an xactimate estimate.

Item Codes

Each line item has a specific code that refers to the specific activity or material. The “Category” or the word “CAT” in the Xactimate estimate corresponds to the trade of the item. For example (RFG) refers to Roofing and (CAB) refers to Cabinetry. There are several codes for other line items such as (FCW) referring to Floor Covering – Woods, (WDS) referring to Skylights, and others are listed below:

Glossary Of Line Items

Here, you can find the definition of the line items mentioned in the Xactimate estimate as follows:

ACV (Actual Cash Value)

It refers to the depreciated value of damaged property or items which is calculated as replacement cost minus depreciation. ACV corresponds to the amount that would be paid to repair or replace the property when accounting for age and wear.

RCV (Replacement Cost Value)

It is the cost to replace damaged items or property with new items without compromising on quality, and without considering depreciation. RCV corresponds to the full amount required to restore the property to its original condition.

Depreciation

It refers to the deduction in the value of an item or property due to age or wear, usage or general condition. Depreciation is often deducted from RCV to calculate ACV.

Line Item

It is a single item in any Xactimate estimate. Each line item comprises cost, description, quantity, and unit price.

O & P (Overhead & Profit)

These are the extra costs generally added to account for a contractor’s overhead expenses and profit. O&P is a percentage and may be applied to restoration projects.

Price List Code

It corresponds to the code that designates the location, date, and sometimes the type of work for which the pricing applies, followed by the month and year of the estimate. It tends to ensure the estimate using the current, region-specific prices for materials and labor.

Scope Of Work

It is a detailed outline of the tasks, materials, and services needed for the completion of the project. The scope of work section in an estimate specifies what’s covered in the insurance claim and is based on the damages assessed.

Labor (L)

It corresponds to the cost associated with work provided by skilled businesses such as carpenters, electricians, and painters. Each trade’s labor cost is often listed as an hourly rate or per-unit cost within the line items.

Materials (M)

These are the items required for the project like cement, sand, concrete, rebar, etc. These are estimated based on local area prices and the availability of the materials.

Equipment (E)

These are the tools and services required to facilitate the project.

Unit Cost

It is the price of a single item of materials or labor. This helps in calculating the total costs, by calculating all the unit costs.

Tax

The tax is applicable on materials, equipment or labor employment. Some companies list it in the line items while others list it separately.

Mitigation

It corresponds to the emergency services, required to prevent further loss. These are usually listed separately from the line items and are done right after the loss.

Deductible

It refers to the out-of-pocket money that the policyholder is responsible for paying before insurance coverage applies.

Supplement

It is an additional amount that is paid to te insurance company for unforeseen expenses that are beyond the initial estimate.

Claim Summary

It provides a rough idea of all the claims. It is an overview of the estimated costs, covering total ACV, total RCV, depreciation, deductible, and final payout.

SubTotal

Subtotal gives a picture of restoration costs before other taxes are applied. It is the total of line items before the application of extra expenses like O & P.

Estimate Number

It is a unique identifier for the specific estimate created for the project. 

Policy Limits

It corresponds to the maximum coverage amount set by the insurance policy for certain types of damages or specific coverage categories.

Claim Number

At the last, it refers to the unique number assigned to each insurance claim, which helps in tracking and managing the specific case throughout the claims process.

Conclusion

Understanding how to read an Xactimate estimate is essential for homeowners, contractors, and insurance adjusters. By familiarizing yourself with the estimate’s key sections, terminology, and pricing structures, you can confidently navigate the complexities of the restoration process. This knowledge ensures accurate cost assessments and smoother claims handling, making it a valuable tool in managing insurance and restoration projects.