Your insurer approved $55,000. Your contractor says the job costs $90,000. This scenario is common — it's one of the most frequent sources of stress in property insurance claims — and it has specific causes and specific remedies. Here's what creates the gap and how to approach closing it.
Why contractor estimates and insurance estimates differ
The insurer's estimate and your contractor's estimate are not trying to answer the same question. The insurer's estimate calculates what the insurer believes it costs to return your property to its pre-loss condition, using Xactimate's regional pricing database. Your contractor's estimate reflects what they will charge to do the work, based on their actual labor costs, current material prices, and their assessment of what the job requires.
These two numbers diverge for several documented reasons:
- Scope differences. The insurer's adjuster may have missed damage that the contractor found. Hidden damage in walls, secondary smoke damage in remote areas, structural issues not visible during the initial inspection — these add to the contractor's scope without appearing in the insurance estimate.
- Xactimate pricing vs. market pricing. The Xactimate database uses regional averages that may not reflect current market conditions, especially after major storm events when contractor demand is high and materials are scarce.
- General contractor overhead and profit. Xactimate has a line item for general contractor overhead and profit (O&P) that represents the markup for coordinating multiple subcontractors. Insurers frequently omit this from initial estimates. It typically represents 20% of the estimate — a large number on a large claim.
- Code-required upgrades. Your contractor may need to bring systems up to current code as a condition of the permit — electrical panels, plumbing, insulation. The standard insurance estimate doesn't include these unless you have Ordinance or Law coverage and it's explicitly included.
How to close the gap
The first step is understanding where the gap is. Ask your contractor to provide a line-item estimate that you can compare against the insurer's Xactimate estimate. This takes the conversation from "your number is too low" to "these specific items are missing or mispriced." That specificity is what makes a supplement successful.
Common items to check for:
- Is general contractor overhead and profit included in the insurer's estimate? If not, this is a major supplemental item.
- Does the estimate include all affected rooms and areas, including spaces with smoke damage not directly adjacent to the fire?
- Does the estimate reflect actual material grades? If your pre-loss kitchen had semi-custom cabinets, the estimate should reflect semi-custom pricing — not stock.
- Is permit cost included? Reconstruction permits are a real expense.
- Are debris removal and demolition costs fully accounted for?
Filing a supplement
A supplement is a formal request to reopen the insurer's estimate to add line items, adjust quantities, or correct pricing. You can submit a supplement yourself with supporting documentation — contractor estimates, photos, expert assessments — or through a public adjuster who can build and submit the supplement in Xactimate format that the insurer's adjuster can process directly.
Supplements are standard. They're not a sign that something went wrong or that you're being difficult. On major claims, multiple supplements over the life of the claim are common. The insurer's initial estimate is a starting point; the final settlement is what's reached through negotiation.
When to hire a public adjuster
If the gap is large — $20,000 or more — or if the supplement negotiations have stalled, a public adjuster may add value that exceeds their fee. They know which arguments move insurers, which line items may be omitted or supportable under the policy, and how to build the documentation that supports higher pricing.
If you're in the middle of reconstruction and running short of funds because the insurer's payments aren't keeping up with contractor invoices, that's a urgent situation. Don't wait to see if it resolves itself — engage professional help early.
For help with a underpaid Georgia property claim, Resurgens Public Adjusting works with policyholders through the supplement and negotiation process.
Related: Why Fire Reconstruction Can Cost More Than the Insurance Estimate — the anatomy of the gap between insurance estimates and actual reconstruction costs.