An Estimating Terms Glossary for Property Claims

Browse the full Resources Index

Estimating vocabulary shows up in nearly every document a policyholder receives during a property claim, and understanding a handful of core terms makes those documents considerably easier to follow. Replacement cost value, commonly abbreviated RCV, is the cost to repair or replace damaged property with new materials of similar kind and quality, without any deduction for age or wear. Actual cash value, abbreviated ACV, is replacement cost value minus depreciation, representing the value of the damaged property accounting for its age, condition, and remaining useful life at the time of loss. On a replacement cost value policy, an insurer typically pays the actual cash value figure first, with the remaining amount, known as recoverable depreciation, released once the policyholder documents completed repairs.

Depreciation itself is the reduction applied to a specific item’s replacement cost to arrive at its actual cash value, calculated based on that item’s age and expected useful life rather than the age of the building as a whole. A line item is a single entry on an estimate describing one task, such as remove and replace gutter, along with its quantity and unit price, and an estimate is simply the sum of all relevant line items organized by category, such as roofing, siding, or interior repair. Unit cost refers to the price assigned to a single unit of measurement for a given task, whether that unit is a square foot, a linear foot, or a roofing square, which equals one hundred square feet of coverage.

Waste factor is a percentage added to the measured quantity of a material to account for the cutoffs and scrap that occur naturally during installation, and it varies by material and by the complexity of the roof or wall plane being covered. Overhead and profit is a percentage, typically applied to the total cost of a job involving multiple trades, that compensates a general contractor for coordinating and supervising subcontractors, and its inclusion is standard industry practice on multi-trade jobs rather than an unusual add-on.

A supplement is an additional estimate submitted after the original scope of work was written, covering damage or costs discovered once repair work is underway, such as rotted decking found only after old shingles are removed. Scope refers to the full extent of work an estimate covers, and disagreements over scope, meaning what work is included at all, are distinct from disagreements over price, meaning what a given quantity of already-agreed work should cost, though the two frequently get discussed together in practice. Xactimate and Symbility, the two estimating platforms most widely used across the property insurance industry, are the tools most estimators use to translate scope decisions into these standardized line items and unit prices in the first place.

Betterment describes an improvement to a property beyond its pre-loss condition, such as upgrading from a basic material to a significantly higher grade one during repair, and it is generally treated differently than like-kind repair under most policies, though the specific treatment of betterment is a coverage and policy interpretation question rather than an estimating question, and belongs with the policyholder, the carrier, and their respective advisors rather than with an appraiser evaluating the amount of loss.

This is general educational material on the appraisal process rather than legal advice, and the specifics can vary with each state and policy.

Based in Minnesota and serving clients nationwide, Russ Lis is a working property insurance appraiser and umpire. Contact Appraisal Resolution.