Insurance Information: What are estimating guidelines?

If you're reading this, you’ve probably faced, or are facing, the aftermath of a property loss or damage, and it’s led you to navigate the complex world of insurance claims. One of the most crucial aspects of this process is understanding estimating guidelines. What exactly is inside the mysterious black box of insurance estimating guidelines? Although insurance carriers keep this process proprietary, here we will explain what estimating guidelines are, why they matter, and how they affect your insurance claim.

What Are Estimating Guidelines?

Estimating guidelines are essentially a set of internal rules and standards that insurance carriers use to calculate the cost of repairing or replacing damaged property. These guidelines help ensure that estimates are accurate and fair, which is crucial for getting the compensation you deserve from your homeowner's insurance policy. Think of them as a blueprint for how insurance companies and adjusters figure out the value of the damage that occurred.

Why Are They Important?

Accuracy and Fairness: Estimating guidelines provide a structured approach to determining repair costs. Without them, there would be a lot of guesswork involved, which could lead to disputes between you and your insurance company.

Consistency: These guidelines ensure that estimates are consistent and based on your insurance company’s standards, rather than varying from one adjuster to another. The level of consistency can vary, but it is the carrier’s way of striving for fair evaluation of your claim. The guidelines can vary widely between insurance carriers, but internally keep a carrier's adjusters are typically on the same page.

Coverage Determination: By understanding how these guidelines work, you can better assess whether the estimated repair or replacement costs fall within your policy's coverage limits. This helps in avoiding surprises when it comes time to settle your claim.

How Do Estimating Guidelines Work?
Estimating guidelines are based on several key components:

Scope of Work: This involves a detailed description of the damages and the necessary repairs. Adjusters will assess the extent of the damage and identify the work that needs to be done.

Material Costs: Guidelines include current prices for materials and supplies required for repairs or replacements. These costs can fluctuate, so estimates are regularly updated to reflect the latest prices.

Labor Costs: The cost of labor is factored in based on local wage rates and the amount of time required to complete the work. Different types of work may have different labor rates.

Overhead and Profit: Contractors usually include a percentage for overhead and profit in their estimates. Guidelines consider this factor to ensure that all costs are covered.

Do I Get To Use Estimating Guidelines?
Unfortunately, homeowners don’t have access to the estimating guidelines that insurance carriers use. These guidelines are not included in the policy and there is no federal standard; these guidelines can vary widely between insurance carriers. 

For example, one carrier may have their estimating guidelines to paint two coats of paint on the area that was directly replaced with drywall but the rest of the wall will get only a single coat of paint. Other insurance companies have a higher standard of estimating guidelines, and automatically approve putting two coats of paint across an entire wall that was affected.


So What Can I Do as a Home or Property Owner?
Since you don’t have access to your insurers estimating guidelines, you must ensure that the full scope of the work required for indemnification is accounted for. You can do this by:

Getting Detailed Estimates: When you receive an estimate, make sure it’s detailed and itemized. This should include a breakdown of materials, labor, and other costs. If anything seems unclear, don’t hesitate to ask for clarification.

Comparing Estimates: It’s a good idea to get estimates from multiple contractors. This gives you a better understanding of the costs involved and ensures that your insurance company’s estimate is fair.

Reviewing Your Policy: Understand your homeowner’s insurance policy and what it covers. Estimating guidelines will help you see if the proposed repairs are within your policy limits.

Working with Tugboat: If the process feels overwhelming, consider working with Tugboat. We can help review estimates, negotiate with your insurance company, and ensure you receive a fair settlement.

Conclusion:
Estimating guidelines play a critical role in the insurance claim process and are a black box for the policyholder. The process helps ensure that damage is assessed accurately and that repair costs are fair and consistent, and is most effective when the policyholder is an advocate for the full scope of restoration. By understanding these guidelines and actively participating in the estimating process, you can navigate your insurance claim with greater confidence and clarity.

If you have any questions or need further assistance with your insurance claim, feel free to create an account on Tugboat's platform. We’re here to help you every step of the way!