Xactimate Line by Line: How to Read an Adjuster’s Estimate (And Find What’s Missing)

The estimate is a negotiation, not a verdict. Most contractors treat it like the latter—and that’s exactly what carriers are counting on.

• Xactimate is the software platform used to generate the vast majority of insurance estimates in the U.S. Understanding its structure is not optional for contractors doing claims work.
• The most valuable skills in claims work are reading an estimate critically, identifying missing line items, and building a supplement that holds up to scrutiny.
• Overhead & Profit (O&P), code upgrades, and material price escalators are consistently the most under-applied components of any estimate.
• JustClaims uses AI-powered estimate analysis to identify gaps faster and more accurately than manual review.

What Is Xactimate and Why Does It Matter?

Xactimate is the industry-standard estimating software used by the majority of insurance carriers, independent adjusters, and public adjusters in the United States. Developed by Verisk (formerly Xactware), it generates line-item estimates based on a database of regional pricing for labor and materials—updated quarterly. If your client has a property insurance claim, the estimate they receive was almost certainly produced in Xactimate.

Understanding Xactimate matters for contractors because it’s the language in which claim value is determined. If you can’t read the estimate, you can’t identify what’s been left out. And what’s been left out is often where the real money lives.

A few key facts about Xactimate pricing that most carriers won’t volunteer:

• Xactimate prices are averages, not maximums. Actual costs regularly exceed database pricing, particularly in tight labor markets or post-storm surge conditions.
• Database prices are updated quarterly, but many adjusters use older price lists. Confirming the price list date on your client’s estimate is step one.
• Xactimate has hundreds of line items. Most adjusters use a fraction of them. The gaps represent legitimate scope that simply wasn’t applied.

Anatomy of an Xactimate Estimate: The Key Sections

A standard Xactimate estimate contains several components you need to understand before you can evaluate it critically:

The line-item detail section is where most of the work happens. Each line shows a scope description, quantity, unit, unit price, and total. To evaluate it, you need to compare it against what you actually observed on the property—and against what Xactimate’s own database supports as appropriate for that scope of work.

Line Items Adjusters Routinely Miss (And Why)

Certain categories of line items are systematically underrepresented in carrier estimates—not always intentionally, but consistently. Knowing where to look is half the battle.

Roof decking and substrate repairs. Adjusters document the roof covering but often skip decking repair or replacement, even when hail or water intrusion has compromised the deck. Ask: was the decking inspected? Was its condition documented?

Drip edge and starter course. Code in most jurisdictions requires new drip edge and starter strip when a roof is replaced. These are frequently omitted because they require a separate line item and many adjusters don’t apply them automatically.

Gutters and downspouts. When gutters show functional hail damage (dings affecting water flow, seam separations, or disconnected downspouts), they’re coverable. Adjusters often skip them or classify damage as cosmetic. Document every linear foot.

Ventilation. Ridge vents, turtle vents, and soffit vents that show hail impact are replaceable under a roofing claim. Many estimates skip these entirely.

Skylights and solar panels. These are high-value items that require specialty contractors to replace. They’re frequently absent from initial estimates and require specific documentation to include.

Interior damage related to water intrusion. If a compromised roof allowed water entry, the interior damage is a covered extension of the roofing claim. Don’t separate these—document them together as a single event.

Detached structures. Detached garages, sheds, fencing, carports—all exposed to the same storm, all frequently omitted from initial estimates.

Overhead & Profit: The Most Contested Line in Any Estimate

Overhead and Profit—commonly called O&P—is the most consistently contested component of insurance estimates, and it’s a fight worth having. The industry standard is 10% overhead and 10% profit (10/10), applied to the total replacement cost of the project. This is not a bonus. It’s the cost of coordinating and managing a construction project.

Carriers sometimes exclude O&P on the grounds that “general contractor coordination” isn’t required for a simple roofing replacement. This argument has been repeatedly challenged and largely rejected in appraisal proceedings and litigation. If the scope of work Is being performed by or could reasonably require a GC, O&P applies.  Further, overhead and profit is often included as part of the insurance to value (ITV) reports by which premiums are calculated.  In paying our premiums, you are effectively paying for coverage for O&P

“If you’re replacing the roof, the gutters, the fascia, and the siding—that’s a general contractor job. O&P isn’t a request. It’s a line item that belongs in every estimate with multi-trade scope.”

How to handle O&P disputes: document your coordination role, itemize your project management costs, and—if the carrier refuses to include it—flag it as a supplement item and invoke the appraisal clause if necessary. JustClaims has resolved dozens of O&P disputes through appraisal with consistent success.

Code Upgrades in Xactimate: The Hidden Scope

Building codes change. A roof installed ten years ago may have been code-compliant in 2014 and non-compliant with today’s IRC requirements. When that roof is replaced under an insurance claim, the replacement must meet current code—and that delta is covered under virtually every standard property policy via the “Ordinance or Law” or “Code Upgrade” provision.

Common code upgrade line items that belong in most roofing estimates:

• Ice and water shield: Required at eaves, valleys, and penetrations under current IRC in cold climates. If the original roof didn’t have it, replacement must include it.
• Drip edge (as a code item): Many jurisdictions added drip edge as a code requirement in the 2012 or 2015 IRC cycle. Document the local adoption date.
• Underlayment upgrades: Synthetic underlayment requirements vary by jurisdiction but often exceed what the original installation included.
• Ventilation compliance: IRC 806 specifies attic ventilation ratios. If the existing ventilation is non-compliant, a replacement must bring it to current standard.

To include code upgrades in a supplement, document the specific code section, the local jurisdiction’s adoption date, and the current installation’s non-compliance. Vague references to “code upgrades” get rejected. Specific citations get paid.

How to Use Xactimate Data in the Supplement Process

Once you’ve identified the gaps in the carrier’s estimate, you need to build a supplement that holds up. The anatomy of a successful supplement:

1. Reference the original estimate: Identify the claim number, estimate version, and date. Be specific about which line items are disputed or missing.
2. Provide a scope justification for every added line item: Don’t just add a line and a price. Explain why the item belongs: what you observed, what code or manufacturer specification supports inclusion, and what quantity you’re claiming.
3. Photograph everything you’re supplementing: Photos that directly correspond to each added line item are essential. Adjusters can’t dispute what they can see.
4. Use Xactimate’s own database to price the supplement: Using Xactimate pricing in your supplement removes the “that’s not what it costs” objection and keeps the argument on scope, not rates.
5. Submit in writing and request written response: Supplement submissions via email or carrier portal create a paper trail. Verbal approvals don’t.

When to Escalate Beyond the Estimate

Not every supplement dispute belongs in the supplement process. When a carrier repeatedly underestimates, ignores supplement submissions, or takes an unreasonable position on scope, the appropriate next step is the appraisal clause—not more supplementing. The appraisal process was designed for exactly this situation: a legitimate dispute about the amount of loss that can’t be resolved between the carrier and the policyholder.

Signs it’s time to stop supplementing and start the appraisal process:

• The carrier has issued two or more revisions that still don’t reflect the actual scope
• Supplement submissions are being ignored or met with form-letter rejections
• The carrier is using “prior damage” or “cosmetic exclusion” as a blanket justification
• The gap between your estimate and the carrier’s exceeds 25% of total claim value

JustClaims specializes in this transition—from the supplement process to appraisal—and we know exactly when and how to invoke the appraisal clause to maximize your client’s outcome.

In Summary

Xactimate is a tool. Like any tool, it produces better results in skilled hands. The contractors who consistently get full claim value for their clients aren’t just good at roofing—they’re good at reading estimates, building supplements, and knowing when to escalate. The estimate is where the fight starts. JustClaims is where it ends.

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