Xactimate, Insurance Gaps, and the Wildfire Rebuild

Most Pacific Palisades homeowners expect their insurance coverage to track closely with the cost of rebuilding. But insurers only 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.

In theory, this creates transparency and efficiency. In practice, Insurance providers' 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's default settings are poorly calibrated for post-fire rebuilds on complex, coastal lots. Insurance adjusters often apply outdated pricing data or omit key items such as hillside stabilization, solar replacements, or upgraded mechanical systems.

Only builders with local experience can build estimates that account for these realities. At ARCA, we know how to prepare Xactimate estimates with true rebuild costs, maximizing insurance recovery and efficiency.

Scope and Coverage Are Separate Battles

Even with accurate pricing, policy limits often 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.

Gaps often appear in allowances for code upgrades, retaining walls, fire-resistant materials, and site prep. Homeowners must push for line-by-line justification, especially when the insurer’s estimate omits critical scope items.

Navigating ALE and Timelines

Additional Living Expenses (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 diligently submit receipts and documentation to avoid being undercompensated or delayed.

Know What You're Looking At

If the insurer's Xactimate estimate forms the foundation for your payout, it's critical to know what was left out. 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 coded as laminate.

Our experienced in-house estimators understand how to build construction scopes that reflect actual conditions. This doesn’t mean inflating the claim, it means aligning estimates with actual costs of rebuilding 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.

ARCA Builders works with homeowners to evaluate insurance scopes, estimates, and manage full-scale fire reconstruction projects throughout Pacific Palisades and Malibu.