How to Negotiate with Contractors for Repair Estimates
One of the trickiest parts of handling property claims is negotiating repair estimates with contractors. As an adjuster, you’re the middleman—ensuring the insured is treated fairly while protecting the carrier from inflated or inaccurate repair costs. It’s a delicate balance that requires both professionalism and people skills.
Here’s a practical guide to help you negotiate effectively with contractors, whether you’re working on a residential water loss, fire damage, or a complex commercial claim.
1. Know the Scope Inside and Out
Before you even pick up the phone, be sure you fully understand the scope of repairs. Review your notes, photos, and measurements carefully. If you’re using estimating software (like Xactimate), be sure your line items and quantities match the actual damages observed. This gives you a solid foundation and prevents contractors from easily inflating the scope or slipping in questionable items.
2. Do Your Homework on Pricing
Contractors sometimes argue that your pricing is too low—especially if they use a different estimating platform or rely on internal pricing lists. Be ready with current, market-based pricing. Xactimate and similar tools provide regionally adjusted pricing updates; use these as your benchmark. If a contractor claims their costs are higher, ask for detailed documentation (vendor invoices, labor rates, etc.). Reasonable contractors will be happy to provide this if it’s legitimate.
3. Communicate Clearly and Professionally
Treat contractors as partners, not adversaries. A calm, respectful tone goes a long way toward building cooperation. Explain that your role is to ensure fair compensation based on policy terms and prevailing rates—not to underpay them or deny work.
If you find discrepancies or scope issues, walk through them point by point. A phrase like “Help me understand why you included this line item” invites conversation instead of confrontation.
4. Focus on What’s Reasonable and Customary
Your carrier isn’t obligated to pay for gold-plated repairs when the policy calls for restoring the property to pre-loss condition. Stick to what is reasonable and customary for the area and the loss type.
Be prepared to negotiate—but not cave. If a contractor is demanding unnecessary upgrades, brand-new code compliance work not required by local law, or excessive overhead and profit on a simple job, push back—politely but firmly.
5. Document Everything
Keep written records of your conversations and negotiations. If you agree to adjust an estimate or accept certain line items, document the reasoning in your file. If you reject inflated costs, note the reasons. This protects you if disputes arise later.
6. Know When to Escalate
If a contractor refuses to budge or is acting in bad faith, don’t hesitate to bring in your manager, the insured’s representative, or a neutral third-party appraiser. Sometimes it’s better to escalate than to waste time on an unproductive negotiation.
The goal of negotiating repair estimates isn’t “winning” or “beating” contractors. It’s to reach a fair, accurate, and defensible settlement for all parties. By approaching negotiations professionally and systematically, you’ll foster smoother claims handling and better outcomes for both the carrier and the insured.