Xactimate, Insurance Gaps, and the Wildfire Rebuild

When a wildfire destroys a home, most Pacific Palisades homeowners expect their insurance coverage to track closely with the cost of rebuilding. But insurers issue partial advances based on internal estimates, not final valuations.

The full negotiation typically plays out months later, and the outcome is often shaped by a single piece of software: Xactimate.

What Is Xactimate?

Xactimate is the most widely used estimating software in the insurance industry. it’s used by adjusters, contractors, and restoration professionals to calculate repair costs using a standardized pricing database. It includes regional labor and material rates, 3D sketch tools, and formatted estimate reports, all aimed at producing consistent, line-item-based valuations.

In theory, this creates transparency and efficiency. In practice, many homeowners find that Xactimate estimates understate actual rebuild costs, especially in high-end markets like Pacific Palisades.

The Problem Isn’t the Tool, It’s the Application

Xactimate can be a useful starting point, but its default settings are rarely calibrated to post-fire rebuilds on complex, coastal lots. Adjusters may use repair templates, apply outdated pricing data, or omit key scope items such as hillside stabilization, solar replacements, or upgraded mechanical systems.

Contractors with local experience know how to build estimates that account for these realities. While we don’t rely solely on Xactimate, we know how to prepare estimates that insurers can’t easily ignore, and how to reconcile software-generated numbers with real-world construction requirements.

Scope and Coverage Are Separate Battles

Even with accurate pricing, homeowners face another hurdle: policy limits that don’t reflect current replacement costs. Many homes are insured based on valuations set years ago, with minimal annual increases. In today’s environment, a 4,000 sf home can cost $800-$1,200+ per square foot to rebuild.

Beyond the dwelling coverage, gaps often appear in allowances for code upgrades, retaining walls, fire-resistant materials, and site prep. Homeowners must often push for line-by-line justification, especially when the insurer’s estimate omits scope items that are nonnegotiable in practice.

Navigating ALE and Timelines

Additional Living Expenses (ALE) is another critical section of the policy. ALE covers rental housing, food, and temporary relocation expenses while your home is being rebuilt. California law now provides up to 36 months of ALE coverage in declared disasters, but that window only matters if the policy's dollar limit lasts that long.

In Pacific Palisades, temporary housing alone can exceed $15,000 per month. A capped ALE policy can be exhausted in under a year. And with construction timelines often running 18–24 months, the shortfall has to be planned for.

Insurers typically reimburse ALE on a monthly basis, not in advance. Homeowners must submit receipts and documentation—a process that requires diligence and attention to detail. Those without proper tracking often find themselves undercompensated or delayed.

Know What You're Looking At

Xactimate estimates can look comprehensive at first glance: hundreds of line items, prefilled pricing, organized sections. But not all line items are created equal. Some examples we have caught:

• Regional averages that lag behind local rates.

• Materials or finishes that don’t align with the pre-loss condition of the home.

• Custom cabinetry may be priced as stock millwork.

• Solid hardwood might be coded as laminate.

If the insurer's estimate forms the foundation for your payout, it's worth knowing what was left out.

Our experienced in-house estimators understand how to build construction scopes that reflect actual conditions, not just software assumptions. This doesn’t mean inflating the claim, it means aligning expectations with what it will cost to rebuild to prior condition or better.

Documentation Drives Outcomes

Under California Insurance Code §2071, you have the right to request all “claim-related documents,” including the insurer’s estimates, reports, and internal scopes. You should also request a certified copy of your full policy.

Meanwhile, document everything. Keep a written log of conversations with your adjuster. Confirm all phone calls in email. If the insurer fails to respond within 15 days, that delay itself may constitute an unfair claims practice under 10 CCR §2695.5(d).

The burden of proof ultimately lies with you, the homeowner. But we can help you build a clean, well-documented file, complete with accurate estimates, receipts, and communications, to provide leverage in any dispute.

Be Proactive

Rebuilding in Pacific Palisades is a long process, and insurance claims are only the beginning. Policyholders who accept early valuations without scrutiny often find themselves underfunded when construction begins. Accurate estimates and detailed documentation put you in a stronger position to fund their rebuilds fully.

ARCA Builders works with homeowners to evaluate insurance scopes, assemble build-ready estimates, and manage full-scale fire reconstruction projects throughout Southern California.