Scope of Loss Michael Sultan asked 4 weeks ago
Scope of Loss

UP answered my previous question regarding the insurance’s estimate of 1,533 SF versus what we thought it was (1,850 SF) and what we should do. One suggestion was to find out how the insurance company determined their square footage. We have a 2-story house. They supplied us with a SF floor plan based on a sketch I sent them. I determined they used the INSIDE MEASUREMENTS when they gave me the scope of loss calculations (which low-balled the estimate). They did include the outside stucco, painting, and gutters. When we take their “floor plan” and measure the OUTSIDE SF, it is over 1,800 square feet.
So my question is: are they correct?
When you say cost per SF, is it based on inside SF or outside SF, or does it matter as long as you include the cost of the outside repair of the house?
For example:

$729,000 ÷ 1,533 SF = $475 per square foot
$729,000 ÷ 1,800 SF = $405 per square foot

Does this really matter (other than for the foundation)? Do we just need a realistic scope of loss?

1 Answers
Answer for Scope of Loss Alexis Ricci Staff answered 4 weeks ago
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Hi Michael,

Your question touches on a critical issue in insurance claims that can significantly impact your settlement. Let me break this down:

Insurance companies typically use exterior measurements for square footage calculations when determining replacement costs. This is the industry standard because:

Construction costs are generally calculated based on the building’s footprint and exterior dimensions

Materials like roofing, siding, and structural elements are priced based on the overall building size

Most building permits and construction estimates use exterior measurements

The measurement method absolutely matters beyond just the per-square-foot calculation. Here’s why:

The difference between your examples ($475/sq ft vs $405/sq ft) represents a potential $54,000+ difference in your claim value. While the insurer included exterior elements like stucco and gutters, using interior measurements artificially inflates the per-square-foot cost while reducing the total calculated replacement value.

We recommend:

1) Request documentation from your insurance company explaining their measurement methodology and ask them to justify using interior measurements if that’s what they did;

2) Get an independent measurement from a licensed contractor or appraiser who can provide exterior square footage documentation;

3) Challenge the calculation if they’re indeed using interior measurements – point out that industry standard practice uses exterior measurements for replacement cost calculations;

4) Document everything – keep all correspondence about this measurement discrepancy

The scope of loss should reflect realistic replacement costs based on proper measurements. Since California follows specific regulations about insurance claim handling, you may want to contact the California Department of Insurance if the company won’t adjust their methodology after you present evidence of the proper exterior square footage.