I have had insurance companies say they can not accept lump sum estimates. These estimates are built using Xactimate and have a detailed scope of work including all line items and the grand total prices at the bottom. The insurance company argues that it is required to provide prices for every single line item. It is my understanding that a insurance company can’t dictate how a contractor invoices or writes estimates. My question is I can’t seem to find the exact law that states this is unreasonable for the insurance company to request. Especially since they have a complete scope of work and a price to complete it. Am I wrong in this understanding that insurance companies can’t dictate how a contractor invoices or writes estimates? If I am correct would you happen to know where the law is that states that? Thank you for all you do.
You are correct that insurance companies typically don’t accept “lump sum” estimates, although I am not aware of any law that says they couldn’t if they wanted to. Or, any law that says one can’t present a lump sum claim if they choose to. With that said, I believe both parties benefit when they are working from detailed, line by line, estimates. It is much easier to make comparisons, identify the differences, and resolve the claim. On rare occasion, I have had insurance companies try to settle a claim based on a lump sum contractor’s “bid.” Usually, it is significantly less than my estimate. I tell them the same thing they are saying to you, I can’t accept their lump sum bid because I can’t tell what is really in it.
If you are using Xactimate, you must be writing a detailed estimate in order to generate the trade category recap, or other reports you could use for lump sums. I would encourage you to provide your room by room, line by line estimate instead. I think you will find the carrier and their consultants more willing to consider your estimate if they can understand it, and compare it to their own.