Unit Cost Pricing

The Unit Cost Pricing method was developed many years ago to make estimating insurance losses much quicker and more efficient. Due to its simplicity, it has also allowed those that are not necessarily experts in the construction field to accurately estimate the costs of large construction projects.

Unit Cost Pricing is defined as:  The average, all inclusive, cost for a specific task

For example, Painting of walls can be "unit costed" by the square foot once you know the exact amount of paint, painter's putty, sandpaper, and labor it would take to cover one single square foot of wall space.  Once the cost for that single square has been established it can be accurately extrapolated to every claim that the adjuster is estimating.  I am sure you can see how this is much faster for an adjuster than attempting to figure the individual components every time the need arose.  It also allows for someone who has no experience as a painter to be able to accurately estimate the cost.

There are, however, limitations to Unit Cost Pricing.  Any items that may be different from one job to another would be physically impossible be included in a unit cost.  For example, some rooms may have more light fixtures or trim work to be masked off.  Some rooms may have a tremendous amount of personal property to be covered or moved and others sparsely decorated.  Some may have blinds and drapes to be moved and reset or a waterbed drained and refilled.  It would not be possible to factor these items into a unit cost for painting.

Probably the single largest reason an insurance adjusters estimate may be too low is the failure of that adjuster to recognize that certain items were not intended to be included in a unit cost and must be allowed for separately.  Use common sense when reading an adjusters estimate.  If it does not seam feasible that something could be included in a unit cost, it probably isn't and you need to be paid separately for that specific task.  Most Adjusters, however, are very well aware of what is and is not intended to be included and will make separate allowances for those items.

The link below is to an example estimate for damage to a roof and kitchen.  Note the detail & how the estimate is broken down into many components.  Also note the detailed diagrams of the roof and interior of the home.  The following example is the kind of detailed estimate most insurance adjusters will provide you.  If your insurance adjusters estimate was far less detailed it may be a sign that they were inexperienced or overlooked items that you may be owed for.  Also, be sure to check the measurements on your adjusters estimate and diagram as there may be errors that can significantly lessen the amount you are paid.

Example Adjuster Estimate & Diagrams