When a home is damaged and in need of restoration, most policyholders assume their insurance company will cover the full cost to make things right. But here’s a little-known industry trick that could cost you 15% to 20% of your rightful claim: the misuse of construction price lists by insurance companies in Illinois.
Let’s break it down.
The Hidden Tactic: Using a "New Construction" Price List Instead of a "Restoration" Price List
Insurance companies use estimating software like Xactimate to calculate the value of repairs and rebuilding. What many policyholders don’t realize is that Xactimate offers new price lists every month, which reflect current material and labor costs.
Within these updates are two key categories:
- New Construction Price Lists
- Restoration Price Lists
Here’s the big difference:
- Restoration price lists are higher – because they account for the complexity, specialized labor, and technical challenges involved in restoring a damaged property.
- New construction price lists are 15% to 20% lower, because building from the ground up is generally more straightforward and efficient.
So when an insurance company applies a new construction price list to a restoration claim, they are undervaluing your loss by up to 20%. And they’re saving themselves that money – at your expense.
Why This Matters to You
The difference in price lists can dramatically reduce your claim settlement. Imagine being approved for only $80,000 in repairs, when the true restoration cost is $100,000. That $20,000 shortfall doesn’t come out of the insurance company’s pocket – it comes out of yours.
And let’s be clear: restoring a home after fire, water, or storm damage is far more complex than building new. Restoration requires:
- Careful demolition
- Matching existing materials
- Working around existing structures
- Hazard mitigation
- Specialized tools and skilled labor
To call that “new construction” is not just inaccurate – it’s unethical.
So, What’s the Solution?
When an insurance company refuses to apply the appropriate pricing, it’s time to invoke the Appraisal Clause in your policy. This provision allows for an impartial third-party evaluation of your claim when there’s a dispute over the amount of loss.
Here’s how it works:
- You select an appraiser, and the insurance company selects theirs.
- The two appraisers choose a neutral umpire.
- Together, they review the scope and pricing of your claim.
- More often than not, the appraisal team recognizes that restoration work demands restoration pricing – and they side with the policyholder.
The Role of a Public Adjuster
A licensed public adjuster knows the difference between new construction and restoration – and they can make sure your claim reflects the true complexity and cost of the work needed. If your insurance company is lowballing your estimate with a new construction price list, your public adjuster can:
- Challenge the pricing
- Invoke the Appraisal Clause
- Bring in qualified experts
- Advocate for restoration pricing
Final Thoughts
Restoration is not new construction. It’s a highly technical, labor-intensive process that deserves proper compensation. If your insurance company is applying the wrong price list, they’re not just saving themselves money – they’re costing you a proper recovery.
Don’t let them get away with it. With the help of a public adjuster and the Appraisal Clause, you can take back control and secure the full value of your insurance claim.
Contact Us for a Free Consultation
On-Site Adjusting is here to help. Contact us today for a free consultation and learn how we can advocate for you throughout your insurance claim.
📞 Call us at (866) 861-4992
📧 Email us at hello@onsiteadjusting.com
