5 Common Estimating Mistakes That Cost Restoration Companies Money

You completed a complex restoration job, submitted the claim, and waited. When payment finally arrives, it’s 30% less than estimated. The insurance company reduced your scope, questioned your pricing, and nickel-and-dimed every line item.

This scenario plays out thousands of times daily across the restoration industry. But here’s what most contractors don’t realize: it’s not the insurance company being difficult—it’s your estimate creating the problem.

After reviewing thousands of restoration estimates, we’ve identified five critical mistakes that consistently cost contractors money. Each one is fixable, and each fix directly improves your bottom line.

Mistake #1: Using Generic Line Items Without Detailed Justification

What it looks like:

Water extraction: $850
Drying services: $4,200
Contents manipulation: $600

Why it costs you money:

Generic line items give adjusters ammunition to reduce your claim. Without detail, they can’t verify your work—and what they can’t verify, they reduce or deny.

When you write “drying services: $4,200,” the adjuster sees an opportunity. Maybe you only needed 2 days instead of 3. Maybe you didn’t need that many dehumidifiers. Without documentation, they’ll default to the minimum reasonable interpretation.

The cost: 15-30% reduction in drying and equipment charges on average.

How to fix it:

Break down every service into verifiable components:

Drying Equipment & Services:
- Truck-mount extraction (850 sq ft) @ $0.45/sq ft: $382.50
- Commercial dehumidifiers (4 units × 3 days) @ $85/day: $1,020
- Air movers (12 units × 3 days) @ $15/day: $540  
- Hydroxyl generators (2 units × 3 days) @ $65/day: $390
- Daily moisture monitoring with thermal imaging: 3 visits @ $175: $525
- Antimicrobial application (850 sq ft) @ $0.45/sq ft: $382.50
- Equipment delivery, setup, and removal: $450
Total drying services: $3,690

Now the adjuster has to challenge specific items with specific justifications. Your documentation makes reduction difficult.

The principle: The more granular your estimate, the harder it is to reduce.

Mistake #2: Underestimating or Omitting “Invisible” Costs

What gets left out:

• Project management and supervision time
• Travel time to/from job site
• Permit fees and inspection costs
• Waste disposal and dump fees
• Equipment decontamination and cleaning
• Administrative documentation time
• Storage fees for contents
• Security and site protection

Why contractors omit these:

It feels awkward to charge for things that aren’t “physical work.” You think, “I’m just driving to the site, that’s not billable.” Or “I’m already managing the project, why charge extra?”

Here’s the reality: Every successful contractor in every industry charges for these services. Plumbers charge trip fees. Attorneys charge for travel time. Consultants charge for administrative work.

These are legitimate business expenses. When you don’t include them, you’re subsidizing insurance companies with your profit margin.

The cost: $500-$2,000 per project in unreimbursed expenses.

How to fix it:

Include every cost category in your estimates:

Project Management & Oversight:

• Initial assessment and scope development: 2 hours @ $95/hr: $190
• Daily progress monitoring and documentation: 3 visits × 1 hour @ $95/hr: $285
• Subcontractor coordination and quality control: $225
• Final walkthrough and sign-off: 1.5 hours @ $95/hr: $142.50

Ancillary Costs:

• Permit fees (building department): $125
• Waste disposal (2 tons @ $85/ton): $170
• Contents storage (10 days @ $25/day): $250
• Equipment decontamination: $180

The principle: If it’s a real cost to your business, it belongs in the estimate.

Mistake #3: Failing to Document and Charge for Specialized Equipment

Common scenario:

You bring thermal imaging cameras, moisture meters, hydroxyl generators, and specialized extraction equipment to every job. These tools cost thousands of dollars and require maintenance, calibration, and eventual replacement.

But your estimate says: “Equipment included in labor rate.”

Why this costs you money:

Modern restoration equipment is expensive and specialized. A quality thermal imaging camera costs $3,000-$10,000. Industrial dehumidifiers run $1,500-$3,000 each. Moisture meters need annual calibration.

When you bundle equipment into labor rates, you’re:

• Making your labor look artificially expensive
• Losing equipment recovery on small jobs
• Giving adjusters opportunity to reduce your “inflated” labor
• Not being compensated for equipment depreciation

The cost: $15,000-$30,000 annually in unrecovered equipment costs for a mid-size operation.

How to fix it:

Itemize specialized equipment separately with clear daily/usage rates:

Specialized Equipment:

• Thermal imaging documentation: 3 visits @ $125/visit: $375
• Moisture detection and monitoring: Daily @ $75 × 5 days: $375
• Truck-mount extraction system: 850 sq ft @ $0.45/sq ft: $382.50
• HEPA air filtration (negative air): 3 days @ $95/day: $285
• Specialty drying mat system: 150 sq ft @ $3.50/sq ft/day × 3 days: $1,575

Pro tip: Include equipment descriptions and photos in your documentation. When adjusters see the actual specialized equipment you’re using, they’re more likely to approve the charges.

The principle: Specialized equipment deserves specialized pricing.

Mistake #4: Using Inaccurate Measurements and Quantities

The scenario:

You eyeball the affected area and estimate “about 800 square feet” of water damage. The adjuster measures and calculates 640 square feet. Your entire estimate gets reduced by 20%.

Or worse: your measurements are inconsistent across line items. You claim 850 sq ft for extraction but 750 sq ft for antimicrobial treatment. Now you look careless or dishonest.

Why this costs you money:

Inaccurate measurements are the #1 reason adjusters reduce estimates. It’s objective—either your square footage is correct or it isn’t. When you’re wrong, they assume everything else is inflated too.

Types of measurement errors:

• Guesstimating instead of measuring
• Measuring only damaged area (not affected area)
• Inconsistent measurements across line items
• Rounding up too aggressively
• Including non-affected spaces
• Measuring wrong dimension (linear feet vs. square feet)

The cost: 15-40% reduction in affected areas, cascading through entire estimate.

How to fix it:

Measure everything, photograph measurements, document methodology:

1. Use measurement tools: Laser measures, measuring wheels, or measurement apps with photo documentation
2. Document measurement methodology in estimate: “Affected area measured using laser distance meter: Living room (18′ × 22′ = 396 sq ft) + Hallway (3′ × 12′ = 36 sq ft) + Bedroom (12′ × 15′ = 180 sq ft) = 612 sq ft total affected area”
3. Include floor plan sketch or photo with measurements marked
4. Be consistent across all line items: If you measured 612 sq ft affected, every area-based line item should reference 612 sq ft
5. Differentiate between affected and damaged areas clearly:
   • Damaged area: Requires removal/replacement
   • Affected area: Requires cleaning, drying, or treatment
   • Document both separately

Pro tip: Take photos of your measuring device showing the dimensions. It’s irrefutable evidence.

The principle: Precise measurements eliminate the easiest reduction target.

Mistake #5: Not Accounting for Code-Triggered Upgrades

The costly surprise:

You’re replacing water-damaged electrical outlets in a 1985 home. You quote outlet replacement at standard rates. The adjuster approves.

Then you discover the home isn’t up to current code—you need GFCI outlets in all wet locations, AFCI protection in bedrooms, and updated panel connections. The additional cost is $850.

You submit a supplement. The adjuster denies it: “Upgrades aren’t covered.”

Why this costs you money:

When repairs trigger code requirements, you’re legally obligated to meet current codes—but if you didn’t include these costs in your original estimate, you’re eating the difference.

Common code-triggered upgrades:

• GFCI/AFCI protection when replacing outlets or circuits
• Insulation requirements when opening walls
• Ventilation requirements in bathrooms
• Fire-rated materials in certain locations
• Asbestos/lead paint abatement during demo
• ADA compliance in commercial properties
• Energy efficiency requirements (Title 24 in California)

The cost: $500-$5,000 per project in unreimbursed code-compliance work.

How to fix it:

During initial assessment, identify potential code triggers:

1. Note property age and likely code gaps
   • Pre-1990: Probably needs GFCI updates
   • Pre-1978: Potential lead paint issues
   • Pre-1985: Likely insulation deficiencies
2. Include code-compliance line items proactively:

   Electrical Repairs:
   - Outlet replacement: 4 standard outlets @ $45: $180
   - GFCI outlet upgrades (code required in wet locations): 3 outlets @ $95: $285
   - AFCI breaker upgrade (code required for bedroom circuits): 1 breaker @ $165: $165
   - Electrical inspection fee: $85
   Note: Per NEC 406.4(D)(3), replacement receptacles must include GFCI protection in locations where GFCI is currently required by code.

3. Cite specific code sections in your justification
4. Explain “repair triggers code compliance” to adjusters upfront: “The insurance policy covers repairs, but repairs must meet current code. When we replace damaged components, we’re legally required to bring them to current code standards.”

The critical distinction:

• Betterment/upgrade: Improving beyond original condition (not covered)
• Code compliance: Meeting legal requirements triggered by repair (covered)

Pro tip: Some jurisdictions offer “substantial repair” exemptions that allow matching existing non-code-compliant conditions. Know your local rules and use them strategically.

The principle: Code compliance isn’t an upgrade—it’s a legal requirement.

Bonus Mistake: Not Using Current Xactimate Pricing

The quick killer:

You’re using Xactimate pricing from 18 months ago because you haven’t updated your database. Your estimate shows $2.45/sq ft for drywall removal. The adjuster’s current Xactimate shows $2.87/sq ft.

You just voluntarily gave up 17% of your drywall removal revenue.

Why this happens:

Xactimate updates pricing quarterly. If you’re not updating regularly, you’re using outdated (usually lower) pricing while adjusters are using current rates.

The cost: 5-15% revenue loss across entire estimate due to outdated pricing.

How to fix it:

• Update Xactimate pricing quarterly (at minimum)
• Verify you’re using correct regional pricing list
• Cross-check a few key items against adjuster estimates
• If using other software, benchmark against current Xactimate

The principle: Never leave money on the table because you’re using old data.

The Estimation Profit Audit

Calculate what these mistakes are costing you annually:

Average project size: $____________

Number of projects annually: $____________

Mistake #1 (Generic line items): Estimated reduction: 20% of equipment/drying charges Lost revenue per project: $____________ Annual cost: $____________

Mistake #2 (Omitted costs): Average unreimbursed expenses per project: $____________ Annual cost: $____________

Mistake #3 (Equipment undercharging): Equipment cost recovery gap per project: $____________ Annual cost: $____________

Mistake #4 (Measurement errors): Average estimate reduction due to measurements: $____________ Annual cost: $____________

Mistake #5 (Code compliance omissions): Average unreimbursed code work per project: $____________ Annual cost: $____________

Total annual cost of estimation mistakes: $____________

For most restoration contractors doing $1-3M in revenue, these mistakes cost $75,000-$250,000 annually in lost profit.

The Path Forward: Precision Estimating

Contractors who maximize claim value do three things differently:

1. Document everything obsessively: Photos, measurements, equipment logs, industry standards, code references
2. Itemize to the smallest reasonable detail: Make reductions require specific justification
3. Include every legitimate cost: Project management, equipment, ancillary expenses, code compliance

The mindset shift: Your estimate isn’t just a bid—it’s a legal document supporting insurance claim payment. Treat it accordingly.

Stop Leaving Money on Every Claim

Every undercharged estimate is profit walking out the door. Every omitted cost is revenue you earned but won’t collect. Every measurement error is a reduction you invited.

The difference between a mediocre estimate and an excellent one? Often $2,000-$5,000 per project.

Don’t want to become an estimation expert? Smart Claims™ specialists create detailed, defensible estimates that maximize approved claim value while maintaining 100% accuracy and compliance.

Our team knows every line item that adjusters look for, every cost that contractors typically miss, and every justification that turns “maybe” into “approved.”

Need this done for you? Stop leaving money on the table with estimation mistakes. Submit your claim to Smart Claims™ and get every dollar you’ve earned.