Understand your scope of loss

1Start with the right documents

A scope of loss describes the damage and the repair work being estimated. An itemized estimate adds quantities and prices. People sometimes use these names interchangeably. The estimate helps explain the proposed work; your policy, coverage decision, and payment letter answer different questions.

Check that the claim header belongs to your property and loss: insured name, address, claim reference, loss date, adjuster contact, and estimate revision. Then find the coverage summary and any limits or deductible entries. Keep the latest version and the prior one; a revised estimate usually replaces earlier figures rather than creating a second amount to add.

Source: Travelers: understanding your property estimate.

An estimate is also separate from your construction agreement. Before approving work, compare the contractor's written scope with the insurer's estimate and ask for an explanation of differences.

2Read the line items

The numbers below are deliberately simple. They were created from scratch for teaching and do not come from a real homeowner's scope. Read across a row before jumping to the total.

A–B: Find the location and version

Match each area to the house: roof slopes, a particular exterior elevation, or a separate structure. A roof total alone does not tell you whether gutters, screens, paint, or a fence were considered.

C: Read the action, not just the material

Removing old shingles is different from supplying and installing new shingles. Detaching and resetting an existing item is different from replacing it with a new one.

D–E: Check the unit and multiplication

In this example, 50 LF × $20 per LF = $1,000. The same quantity priced per square foot would mean something different. Check the rate and unit together.

F: Read the summary adjustments

Our fictional subtotal is $11,000; the invented $500 tax and $2,500 O&P allowances make $14,000. This is the estimated replacement cost before the payment deductions below.

Your format may also show age, condition, depreciation, and ACV on each line. Symbols and abbreviations differ between estimates; use that document's legend rather than guessing what parentheses or brackets mean.

3Check the measurements

SQRoofing square

1 SQ = 100 square feet

SFSquare foot

Area, such as a roof surface

LFLinear foot

Length, such as a gutter run

EAEach

Count, such as four screens

A 2,000 SF roof surface equals 20 SQ. That is roof area, not the home's interior floor area: pitch, overhangs, and separate roof planes matter. GAF explains the square conversion and the use of measured roof planes. Read GAF's roofing-square guide.

There is no universal waste percentage for every roof. Roof shape, shingle type, valleys, starter treatment, handling, and bundle rounding can affect the calculation. Ask whether starter and ridge materials are separate line items or part of another allowance before counting them twice.

Source: Xactimate: factors used to calculate roof waste.

For underlayment or membrane, distinguish the surface being covered from gross material installed with laps and overlaps. Ask how each quantity was derived. A material takeoff and a measured roof area answer different questions.

Compare the measurement report or sketch with the estimate: which slopes are included, how many layers are being removed, and what lengths are shown for eaves, rakes, ridges, valleys, and gutters? Ask about any difference rather than assuming every measurement becomes a payable line item.

4Understand materials, labor, tax, and O&P

What does the unit price include?

A line can include material and installation, be material-only, be labor-only, or cover removal. Read its activity and component detail. If material and labor are separated, both may be needed to describe the same work. If a combined line already includes them, adding them again creates duplication. “Remove and replace” is also different from “detach and reset.”

Source: Xactware: units, activities, and line-item prices.

Tax is a calculation to check

Look for the tax rate, the taxable base, and whether tax is included in line totals or added in the summary. Tax settings can treat materials, labor, and O&P differently. Ask which jurisdiction and settings were used; do not multiply the whole estimate by a guessed sales-tax rate. Our $500 example is only an invented allowance.

Source: Verisk: sales-tax and overhead/profit settings (PDF).

Overhead and profit are not one automatic percentage

General contractor overhead covers business expenses not assigned to an individual task; profit is a separate margin. Verisk distinguishes general overhead, job-related costs, and personnel overhead already reflected in labor pricing. Where and how these costs appear depends on the estimate and the work.

Ask what coordination or project work is included, what the percentage is applied to, and whether costs overlap existing line items. A general contractor license or a particular number of trades does not by itself establish a coverage payment. The insurer must explain its treatment under the claim; the $2,500 in our example is not a recommended allowance.

Source: Verisk: overhead and profit explained (PDF).

5How the payment adds up

Replacement cost value — RCV

The estimated cost to repair or replace with comparable materials, before a depreciation deduction. It is not automatically the amount of your first check.

Actual cash value — ACV

A depreciated valuation. In the simplified calculation used here, ACV is RCV minus depreciation. Confirm the settlement method that applies to the particular damaged item.

Deductible

Your share of a covered loss under the policy. Check the applicable dollar or percentage deductible and the base used for any percentage. It is separate from depreciation.

Source: Missouri Department of Insurance: homeowners FAQs.

Source: Travelers: how property claim payments are calculated.

Recoverable does not mean already paid

Recoverable depreciation is an amount that may become payable when the applicable conditions are met. Ask your insurer what repair evidence, invoices, proof of cost, and timing it requires for your policy. Nonrecoverable depreciation is not released simply because you complete repairs. Confirm which label applies to each item.

If qualifying repairs cost less than the estimate, the recoverable amount may be lower. If you choose an upgrade, do not assume the insurer will pay the difference. If the same fictional loss were settled on ACV only, the illustrated $8,000 initial payment would not create an automatic right to the extra $4,000.

Source: Travelers: depreciation and recovery documentation.

For a revised scope, reconcile prior payments too. A new “net claim” figure may represent the total calculated benefit or a remaining payment; ask which. Match amounts to the payment letter and actual payments received, and check any mortgage-company payee instructions separately.

6Document a difference before calling it missing

A supplement asks the insurer to review additional damage, work, or cost beyond the earlier estimate. A higher contractor total alone does not explain the difference. Organize the supporting construction information by location and line item so the reviewer can see what changed.

Source: Missouri Department of Insurance: supplemental claims guidance.

Explain the construction reason for each requested change. Keep storm damage, pre-existing conditions, maintenance, and optional upgrades distinguishable. Documentation supports review; it does not establish that the policy covers every requested item.

Source: Travelers: review of additional repair costs.

Ask your insurer how it wants additional evidence delivered and whether it needs another inspection before permanent repairs. Preserve photos and receipts for temporary protective work. Kansas insurance guidance emphasizes documenting damage and retaining records before and after emergency repairs.

Source: Kansas Department of Insurance: homeowners claims checklist (PDF).

7Questions to ask