Why Your Insurance Company’s First Estimate Is Almost Never Enough

If you’ve ever filed a homeowners insurance claim and felt like the number the adjuster handed you seemed low, you were probably right. Insurance carriers’ initial estimates are routinely incomplete — and understanding why can put thousands of dollars back in your pocket.

Adjusters Are Not Contractors

Insurance adjusters are professionals at evaluating and pricing claims — but most of them are not licensed contractors. They work quickly, often inspecting multiple properties per day, and they rely on software (primarily Xactimate) to generate estimates. That software is only as accurate as the information entered into it.

Items get missed. Quantities get underestimated. Code-required upgrades get omitted. And because adjusters aren’t standing in your attic measuring things by hand, they sometimes simply don’t see everything that’s damaged.

What’s Commonly Missing from a First Estimate

Here are the line items that most frequently get left out of an insurance adjuster’s initial scope:

• Overhead and Profit (O&P) — A standard 10% overhead and 10% profit markup that general contractors are entitled to charge on any project requiring multiple trades. Carriers routinely leave this off the first estimate.
• Code upgrades — When a roof, electrical system, or structural component is replaced, Michigan building code often requires that it be brought up to current standards — even if the old version wasn’t code-compliant. Insurance policies with Ordinance & Law coverage should pay for this.
• Full tear-off vs. recover — On roofing claims, some adjusters initially write for a “recover” (laying new shingles over old) when a full tear-off is actually required by code or manufacturer warranty standards.
• Matching and uniformity — If undamaged areas of your home don’t match repaired areas (siding, flooring, roofing), most policies require the carrier to address the mismatch. This is often omitted from the first estimate.
• Permit fees — Building permits are required for most structural repairs in Michigan. These are a legitimate project cost that should be in the estimate.
• Dumpster and debris removal — Especially on fire and major storm claims, haul-off costs are real and significant.

The Supplement Process

When a contractor identifies line items that were missed or underpaid by the carrier, they submit what’s called a supplement — a revised scope with supporting documentation. This is a normal and legitimate part of the insurance restoration process. A good restoration contractor does this routinely.

Supplementing a claim is not fraud, and it’s not aggressive. It’s making sure the insurance company pays for what the policy actually covers.

What You Should Do

Don’t accept the first estimate as the final word. Get your own contractor to review the adjuster’s scope before signing off. If there are line items missing, your contractor should be able to document and justify every addition.

You hired an insurance company for exactly this situation. A legitimate claim deserves a complete and accurate payout.

Phase III Construction reviews insurance estimates on every single job we take on. We know what’s commonly missed, we know how to document it properly, and we know how to work with carriers to get claims paid correctly. Call us at (734) 237-7322 and we’ll take a look at what you’ve been offered — no cost, no obligation.