Insurance Restoration Pricing

Why this matters

Insurance restoration (water damage, fire damage, mold remediation, biohazard) is the highest-revenue specialty within carpet cleaning + restoration. A routine residential water loss is worth many times a cleaning ticket, and a fire or a large-loss job is an order of magnitude past that. The pricing model is unique - Xactimate-driven, with insurance carrier acceptance + adjuster negotiation. Operators who master insurance restoration scale dramatically; those who don't burn out on disputed payments.

How insurance restoration pricing works

Standard process:

1. Customer files insurance claim
2. Adjuster assigned by carrier
3. Contractor inspects + documents
4. Contractor + adjuster agree on scope + cost
5. Insurance pays per agreed estimate
6. Customer pays deductible only

The contractor's job: accurately estimate + thoroughly document + negotiate when needed.

Xactimate (the industry-standard tool)

Xactimate is the construction estimating software used by:

• 90%+ of insurance carriers
• Adjusters nationally
• Restoration contractors
• Public adjusters

How it works:

• Database of construction items
• Regional price lists (updated quarterly)
• Standardized labor, materials, equipment, overhead
• Outputs detailed estimate in industry-standard format

Contractor's job: input accurate scope + line items.

Most restoration contractors pay for Xactimate as cost of doing business.

The standard pricing components

For water damage restoration:

• Initial loss inspection
• Water extraction
• Pad removal + disposal
• Carpet removal (if Cat 2/3)
• Drywall removal (cut height)
• Insulation removal
• Air movers (per day, per unit)
• Dehumidifiers (per day, per unit)
• Antimicrobial treatment
• Final cleaning
• Reconstruction (separate scope)

Each priced via Xactimate regional rates.

For fire damage:

• Boarding up + initial containment
• Demolition + content pack-out
• Cleaning + deodorization
• Reconstruction
• Content cleaning + storage

For mold remediation:

• Containment setup
• HEPA scrubber day rate
• Removal of contaminated materials
• Antimicrobial application
• Post-remediation clearance testing

Equipment day-rate pricing

Restoration equipment billed per day, per unit, at the regional Xactimate rate:

• Air movers: lowest day rate of the set, but you place the most of them, so the count drives the line
• Dehumidifiers: several times an air mover per day, and rated by class (LGR and desiccant bill higher than conventional). Put the right class on the estimate or you leave money on it
• Air scrubbers / negative-air machines: billed per day whenever containment is in place
• Heat drying and specialty floor-mat systems: highest day rates, and they need the scope note explaining why Class 4 conditions required them

These bill for the days they are ON SITE, even when mostly idle. Insurance pays for documented equipment days, which is why the equipment log is not paperwork, it is the invoice.

Documentation requirements (the audit trap)

Insurance requires:

• Daily moisture readings (every affected room)
• Equipment day log (which units, where, when)
• Photos before/during/after
• Customer communications
• Final dryness verification
• Estimate breakdown by line item
• Reconstruction scope (if separate contract)

Inadequate documentation = denied payment OR reduced payment.

Quality of Earnings reality

For restoration contractors, the question is: are you actually making the margin you think?

Margin elements:

• Xactimate prices include reasonable overhead + profit
• BUT insurance adjusters often negotiate down
• And documentation gaps cause denials
• And aged AR (insurance takes 30 - 90 days)

Established restoration contractors typically run 18 - 30% net margin on insurance work.

Public adjusters

Some customers hire a public adjuster (PA):

• PA represents the customer in claim negotiation
• PA's job: maximize the settlement
• PA's fee: 10 - 25% of claim
• Adversarial to the insurance carrier OR to the contractor sometimes

Contractor + PA work together when interests align (both want full claim paid). Can be adversarial when PA inflates scope beyond what contractor will perform.

Building relationships with adjusters

Long-term restoration success = adjuster relationships.

• Be reasonable in estimates
• Don't inflate scope
• Document thoroughly
• Respond quickly
• Build reputation

Insurance vendor enrollment:

• Carriers maintain preferred-vendor networks
• Enrollment requires IICRC certification + insurance + history
• Enrolled vendors get carrier-routed leads
• Major carrier networks: Travelers, AllState, State Farm, USAA, Progressive

Enrolled + reliable = predictable lead flow.

TPA (Third-Party Administrator) networks

TPAs route restoration claims to contractor networks:

• Contractor Connection, Alacrity Solutions, Sedgwick, Crawford, others. ServiceMaster, BELFOR and Restoration 1 are restoration contractors and franchise networks, not TPAs; you compete with them, you do not join them for lead routing
• Membership fee
• TPA takes a cut OR contractor pays per-lead
• Pros: predictable flow; cons: lower margin, less control

Many restoration contractors join TPA networks early in growth + leave for direct insurance relationships at maturity.

Time + materials pricing

Some smaller jobs OR specialty work uses T&M:

• Equipment day rates as above
• Materials at marked-up cost
• Used for: contained work, post-insurance-paid work, customer-direct projects

Reconstruction scope

After mitigation, the property needs reconstruction:

• New drywall + paint
• New flooring (carpet, hardwood, tile)
• New insulation
• New fixtures
• Repainting

Some restoration companies do reconstruction; others sub it out. Pricing:

• General contractor license often required for major reconstruction

Common insurance-restoration pricing mistakes

Under-estimating:

• Quote lower than Xactimate
• Lose money on the job
• Damaged margin

Over-estimating:

• Adjuster denies
• Customer caught in middle
• Reputation damaged

Insufficient documentation:

• Payment denied OR reduced
• Documentation discipline is mandatory

Slow billing:

• Old AR ages
• Cash flow problem
• Submit invoices weekly OR daily during major losses

Mixing insurance + cash work:

• Confused estimates
• Customer doesn't understand
• Separate them clearly

Annual price + program review

• Xactimate updates quarterly (regional pricing)
• Industry standards evolve (S500 + S520 + S540)
• IICRC certifications maintained
• Insurance vendor enrollments refreshed

References

• Xactimate documentation + pricing references
• IICRC S500 Water Damage Restoration Standard
• IICRC S520 Mold Remediation Standard
• IICRC S540 Trauma + Crime Scene Cleanup
• Insurance carrier vendor enrollment programs
• Manuall internal: Water Damage Restoration Workflow, IICRC Certifications Reference