Estimating, Valuation, and Claim Documentation
This domain tests the numbers behind a claim: measuring quantities, selecting unit costs, distinguishing replacement cost from actual cash value, applying depreciation, and documenting every line so the estimate can survive review. The exam favors estimates that reconcile measurement, scope, and policy terms.
Estimating and documentation rules
- Measure affected areas and convert to trade units: squares for roofing, linear feet for trim, cubic yards for concrete.
- Build a line-item scope by trade, including demolition, access, protection, cleanup, and disposal.
- Distinguish replacement cost from actual cash value; ACV is replacement cost less depreciation.
- Apply overhead and profit when the scope involves multiple trades or a general contractor, consistent with policy and claim practice.
- Include permits, code upgrades, sales tax, and temporary repairs only when supported by the policy and local requirements.
- Document contents with descriptions, quantities, age, condition, photos, receipts, and replacement prices.
- Keep a claim file index: photos, measurements, estimates, invoices, proof of loss, correspondence, and payment records.
Worked example
A roof measures 2,000 square feet. At 100 square feet per square, that is 20 squares; add 10% waste for 22 squares. At $450 per square installed, replacement cost is $9,900 before permit, dumpster, tax, and overhead and profit. If the policy pays actual cash value first and depreciation is 25%, ACV is $7,425, subject to the deductible and policy limit. The adjuster shows the measurement, waste, unit cost, depreciation, and deductible separately so the insured can follow the math.
Traps that cost marks
- Mixing replacement cost and actual cash value in one total.
- Omitting waste, permits, or disposal.
- Claiming overhead and profit on a single-trade job without support.
- Using a rounded room count instead of measured quantities.
- Failing to document depreciation or pre-loss condition.