If you’ve filed a property insurance claim in Michigan, you’ve almost certainly received an “Xactimate estimate” from your insurance adjuster — even if no one told you that’s what it was. It shows up as a stack of line items with cryptic codes, unit prices, and a final number that probably felt lower than you expected. Understanding what Xactimate is, how it works, and where adjusters go wrong is one of the most important things a Michigan homeowner can do after a loss.
What Is Xactimate?
Xactimate is estimating software made by Verisk (formerly Xactware) that is used across the property insurance and restoration industry. It is not a neutral calculator. It is a database of labor and material costs organized by ZIP code, updated quarterly, and designed to produce line-by-line scopes of work for insurance claims. When an adjuster walks your property, they are (in theory) building an Xactimate scope that reflects what it actually costs to restore your home to its pre-loss condition.
The same software is used by restoration contractors, public adjusters, and general contractors to produce their own estimates. That means when Phase III walks the same property, we are working from the same tool — the difference is in what we include, how we price it, and whether we fight for what the data actually supports.
Why Adjuster Estimates Are Routinely Too Low
Adjusters are employees or contracted agents of your insurance company. Their job is to close claims accurately — but “accurately” is subject to interpretation, and the incentives often push toward underpayment. Here are the most common line items that get missed or underpriced in Michigan adjuster estimates.
Overhead and Profit (O&P)
This is the single most commonly omitted line item, and it can represent 20% or more of a claim’s total value. O&P — typically 10% overhead and 10% profit — is what a general contractor charges to manage a multi-trade restoration project. Adjusters frequently omit it entirely on the argument that the homeowner can hire individual subcontractors directly. That is technically possible and practically unrealistic for a homeowner dealing with a fire or major water loss. When a general contractor is needed — and for any significant loss, one is — O&P belongs in the estimate. We fight for it on every applicable claim.
Code Upgrades
Michigan’s building codes have changed substantially over the past 20 years. When a home suffers a covered loss and repairs trigger a permit, the contractor is legally required to bring affected systems up to current code — regardless of what the pre-loss condition was. This includes things like updated electrical panels, egress windows, insulation R-values, and smoke/CO detector requirements. These costs are real and they are covered under most policies’ “code upgrade” or “ordinance and law” provisions. Adjusters routinely omit them from initial estimates. We document the required upgrades and price them correctly.
Depreciation and Recoverable vs. Non-Recoverable
Most homeowner policies are replacement cost value (RCV) policies, but insurers pay in two stages: actual cash value (ACV) first, then the “recoverable depreciation” after repairs are completed. The depreciation calculation itself is often wrong — insurers over-depreciate materials, apply age-life schedules that don’t match real-world conditions, and sometimes depreciate labor (which most states, including Michigan, do not allow on RCV policies). If you received an ACV payment and the depreciation amount feels excessive, it very likely is.
Missed Scope Items
Adjusters conduct visual inspections, often quickly, and they miss things. On a hail claim, that means missed gutters, missed window screens, missed roof pipe boots, missed soft metals. On a water claim, it means missed drywall beyond the obvious wet area, missed insulation, missed flooring under cabinets. Every line item that is missing from the adjuster’s Xactimate is money the insurer keeps.
What “Regional Pricing” Means in Michigan
Xactimate prices are set by ZIP code and updated quarterly based on regional labor and material market data. This matters for two reasons. First, Southeast Michigan pricing is meaningfully higher than rural Michigan pricing — if your adjuster is using the wrong regional data or an outdated price list, every line item is wrong. Second, the Xactimate database lags real-world market conditions. After a major regional storm event — like the hail events that hit Oakland, Macomb, and Wayne counties repeatedly in recent years — contractor demand spikes and actual costs rise faster than the quarterly database updates. We document actual market pricing when it exceeds the Xactimate database and submit supporting documentation to the carrier.
How Phase III Uses Xactimate to Fight Back
We are a licensed Michigan contractor with deep experience producing Xactimate scopes on contested claims. When you bring us your adjuster’s estimate, we do a line-by-line comparison against our own scope. We identify every omission, every incorrect unit price, every missing line item. We write a supplemental estimate with documentation — photos, measurements, code citations, material invoices — and we submit it to your carrier formally.
This is not a negotiating trick. It is the correct use of the same tool your insurer used. Carriers respond to documented Xactimate scopes because they are using Xactimate to evaluate claims. We speak their language, and we use it to hold them to what your policy actually requires them to pay.
What Michigan Homeowners Should Do After Getting an Adjuster Estimate
Do not accept the adjuster’s estimate as final. It is an opening position, not a binding determination. Here is what to do:
- Get a second estimate from a licensed restoration contractor before signing anything or authorizing any work. This should cost you nothing — any reputable contractor will estimate a legitimate insurance claim.
- Compare the estimates line by line. Look for O&P, code upgrades, and items that appear in the contractor’s scope but not the adjuster’s.
- Do not cash the check without understanding what you’re releasing. Some partial payments come with endorsements that limit your ability to pursue additional amounts. Read everything before you sign.
- Document everything from day one. Photos, videos, written communications with your adjuster — all of it. The documentation you collect in the first 48 hours is often the most important evidence you have.
- Call Phase III. We will review your adjuster’s estimate at no cost and tell you whether you have a supplemental claim worth pursuing. If the gap is significant, we will manage the supplemental process on your behalf.
The Bottom Line
Xactimate is not inherently unfair — it is a tool. What makes an estimate fair or unfair is the completeness of the scope, the accuracy of the pricing, and the willingness to include every item your policy covers. Adjusters work for the insurance company. Phase III works for you. When those two Xactimate estimates land on an adjuster’s desk, you want yours to be airtight.
If you’ve received an adjuster estimate on a Michigan property claim and you think something is off, contact Phase III Construction. We’ll review it, compare it to what we would scope, and give you a straight answer about where the gaps are and what they’re worth.