Insurance Restoration Pricing

Why this matters

Insurance restoration (water damage, fire damage, mold remediation, biohazard) is the highest-revenue specialty within carpet cleaning + restoration. Average residential restoration job. Larger losses. 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:

These are billed for the days they're on-site, even if mostly idle. Insurance pays for documented equipment days.

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:

• ServiceMaster, BELFOR, Restoration 1, others
• 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