Kabateck LLP Managing Partner Shant Karnikian and Senior Associate Barret Alexander recently authored a featured CLE article in the Daily Journal: “Xactimate is not the law: How insurers use one software program to underpay wildfire claims.”
The piece takes a close look at what Xactimate is, who controls it, and why its pricing data regularly fails to reflect actual market conditions following a major disaster. When thousands of homeowners in the same region need similar construction services at the same time, real contractors price emergency conditions into every bid. Xactimate, a historically based system, does not.
The article also examines how individual adjusters can manipulate Xactimate at the line-item level to drive down claim values, from selecting labor efficiency settings to omitting damaged components and substituting lower-grade materials without disclosure. The result, as the authors note, is an estimate that projects precision while resting on a series of undisclosed decisions that uniformly reduce the insurer’s exposure.
For policyholders’ counsel, the article outlines practical steps to push back, starting with obtaining native Xactimate files in discovery and securing an independent estimate to document exactly where the insurer’s figures diverge from actual market costs.
The bottom line: no standard California homeowners policy authorizes an insurer to cap its obligations at whatever figure a third-party program generates. The policy is the measure of the loss.
To read the full article, click here. (Subscription required.)