Estimating, Valuation, and Damage Assessment
This domain tests how adjusters build a defensible damage estimate and apply policy valuation. The exam focuses on scope, quantity, pricing, depreciation, deductibles, and documentation rather than a single estimating platform.
Building the estimate
A proper estimate identifies the damaged components, quantities, labor and material pricing, removal and disposal, overhead and profit where warranted, sales tax, and code-related items. Documentation should include photographs, measurements, moisture readings, expert reports, and a scope that matches the observed damage. Replacement cost is the cost to repair or replace with like kind and quality; actual cash value subtracts depreciation.
Recoverable depreciation and betterment
When replacement cost coverage applies, depreciation may be withheld until repair or replacement is complete. Betterment and code upgrades require policy support. Matching of undamaged materials is not automatic; it depends on policy language and the extent of damage.
Worked example
A roof estimate covers 30 squares at $400 per square for materials and installation, plus $100 per square for removal, for a replacement cost of $15,000. Depreciation is 25%, or $3,750, leaving actual cash value of $11,250. The deductible is $2,000, so the first payment is $9,250. If replacement cost coverage applies and the roof is replaced, the withheld $3,750 may be released after documentation, subject to the policy.
Traps
Do not use retail pricing when the policy requires replacement cost pricing. Do not forget sales tax, permits, or disposal where applicable. Do not claim overhead and profit automatically on every loss. Do not treat depreciation as permanent when recoverable depreciation applies.