Understanding the Xactimate Estimate
When your insurance company sends you a roof estimate, it almost certainly came from Xactimate — the software used by the vast majority of insurance adjusters and independent adjusters in the country. Xactimate produces a standardized line-item estimate with a consistent format, which means once you understand how to read one, you can read any insurance estimate you ever receive.
The basic structure of an Xactimate estimate is: a header section with your claim information, followed by line items organized by category (roofing, gutters, interior damage if any), then a summary section showing totals, depreciation, and net payment amounts.
Each line item has the same structure: a description of the item, a unit of measurement (squares for roofing materials, linear feet for ridge cap and drip edge, each for individual items like pipe boots), a quantity, a unit price, and a line total. The unit prices in Xactimate are updated periodically based on regional market data — they are not always current, which is one reason supplements are sometimes necessary.
Do not be intimidated by the length of the document. A thorough estimate for a full roof replacement may have 20–30 line items. Each one represents a real component of the job. Your job is to verify that nothing important is missing and that quantities look reasonable for your home's roof size and complexity.
Key Line Items to Verify
These are the line items most commonly missing or underpriced in insurance estimates. Review your estimate against this list before accepting any settlement.
Shingles — the largest line item. Check the quantity (measured in squares — 100 sq ft each) against your roof size. A 2,000 sq ft home typically has 20–25 squares accounting for waste. Check the product description — the estimate should specify an architectural (dimensional) shingle grade, not 3-tab. If it says "3-tab" or just "asphalt shingles" without a grade designation, that is worth questioning.
Underlayment — should specify synthetic underlayment, not 15# felt. Synthetic underlayment costs more but is the current standard. If your estimate prices felt underlayment, that is a grade downgrade worth supplementing.
Decking allowance — estimates should include a line item for decking replacement as an allowance, acknowledging that some boards will need replacement once the old roof is off. If this line is missing entirely, flag it.
Drip edge — a metal flashing that runs along eaves and rakes. Frequently omitted from estimates despite being required by most building codes. Should be listed in linear feet around the roof perimeter.
Ice and water shield — a self-adhering waterproof membrane applied at eaves and in valleys. Required by Arkansas building code in certain applications. Should be listed separately from standard underlayment.
Pipe boots / pipe flanges — rubber or metal boots that seal around plumbing vent pipes. Every roof penetration needs one. These are inexpensive individually but are sometimes omitted from estimates. Count the vent pipes on your roof and verify each is listed.
Ridge cap shingles — a separate product from field shingles, listed in linear feet. Should be explicitly listed, not assumed as part of the shingle quantity.
Removal and disposal — tear-off labor and dumpster/disposal fees. Should be listed as a separate line. If your home has two shingle layers, the quantity should reflect double tear-off.
O&P (Overhead and Profit) — a 10% overhead and 10% profit addition standard in the insurance industry when a general contractor is involved in coordinating the work. Whether O&P applies to your claim depends on the scope and your carrier's guidelines. SMI will advise you on whether to request it.
ACV, RCV, and Depreciation
This is the section of the estimate that confuses homeowners most — and where the largest dollar differences occur.
RCV (Replacement Cost Value) is the full cost to replace your roof with new materials at current prices. This is the number at the top of the estimate summary — what it would cost to do the job today.
Depreciation is the amount the insurance company deducts based on your roof's age and condition. A 15-year-old roof that would cost $14,000 to replace might have $4,000 in depreciation applied, reducing the initial payment to $10,000.
ACV (Actual Cash Value) is RCV minus depreciation. This is typically the amount of your first check. On an ACV-only policy, this is all you get. On an RCV policy, ACV is just the first payment.
Recoverable depreciation is the $4,000 difference in the example above — the amount withheld until the work is completed. Once SMI finishes your roof and submits a certificate of completion, your carrier releases this withheld amount. This second check can be $3,000–$8,000 on a typical Arkansas roof claim. Never skip this step — many homeowners leave significant money on the table by not knowing to request their recoverable depreciation after work is done.
Check your policy declarations page to confirm whether you have an RCV or ACV policy. Most homeowner's policies in Arkansas are RCV, but some older policies and some carrier-specific endorsements are ACV only. If yours is ACV only, the withheld depreciation is not recoverable — which is important context for evaluating your settlement.
Red Flags in a Low Estimate
A settlement that feels too low usually is. The most common reasons:
Missing line items — drip edge, ice and water shield, and pipe boots are most frequently omitted. These items together can represent $800–$2,000 on a typical roof.
Incorrect square count — adjusters sometimes measure from satellite imagery that underestimates complex roof areas. A pitch adjustment factor should be applied for steeper roofs. If your adjuster measured and your roof is steep or complex, verify the square count against your contractor's measurement.
Low unit prices — Xactimate prices are not always current with local market conditions. If material prices have increased since the last Xactimate update, your estimate may undervalue the work.
3-tab shingles priced when architectural specified — a significant material grade difference that adds up to $1,500–$3,000 on a full replacement.
If any of these apply to your estimate, do not accept the settlement before having SMI review it. Our insurance claim team reviews estimates at no cost and files supplements with supporting documentation. The difference between an accurate and an inaccurate estimate is often $2,000–$6,000. Contact us today before signing anything.