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What is Estimating Regarding Claims?

If you are a property or casualty insurance customer who has recently suffered a loss, or a claims professional who works for an insurance company, you may have heard the term estimating. But what does it mean, and why is it important?

Estimating Defined

Estimating is the process of evaluating the extent and cost of damage or injury caused by an insured event, such as a fire, a storm, a car accident, or a theft1. It is a crucial step in the claims handling industry, as it determines how much money the insurance company will pay to the customer or a third party to settle the claim.

The Process

Estimating can be done by different types of claims adjusters, depending on the nature and complexity of the claim. These include:

  • Company adjusters: They work for the insurance company and handle claims filed by its customers.
  • Independent adjusters: They are hired by the insurance company on a contract basis and handle claims in remote areas or during peak periods.
  • Public adjusters: They work for the customer and help them file and negotiate claims with the insurance company.

The estimating process typically involves the following steps1:

  • Inspecting the loss site and documenting the damage or injury with photos, videos, measurements, and notes.
  • Interviewing the customer and any witnesses to obtain relevant information about the cause and extent of the loss.
  • Reviewing the customer’s insurance policy and coverage limits to determine what is covered and what is excluded.
  • Researching and applying local codes and standards to ensure compliance and safety.
  • Sketching a diagram of the structure or vehicle involved in the loss using specialized software.
  • Selecting the appropriate repair or replacement costs for each item or component damaged or destroyed using online databases or catalogs.
  • Calculating depreciation, waste, time, and materials on every item or component.
  • Reviewing and verifying the accuracy and completeness of the estimate.

Benefits of Estimating

Estimating can benefit both customers and claims professionals in several ways:

  • It can ensure that the customer receives fair compensation for their loss according to their policy terms and conditions.
  • It can prevent overpayment or underpayment of claims that can result in disputes or lawsuits.
  • It can speed up the settlement process and improve customer satisfaction and loyalty.
  • It can reduce fraud and abuse by detecting inflated or false claims.

Common Challenges

Estimating can also pose some challenges for customers and claims professionals, such as:

  • It can be difficult to access or inspect the loss site due to safety hazards or environmental conditions.
  • It can be hard to estimate complex or unusual losses that require specialized knowledge or expertise.
  • It can be influenced by human errors or biases that can affect the accuracy or objectivity of the estimate.
  • It can be affected by external factors such as market fluctuations, supply chain disruptions, or regulatory changes.


I make estimating more enjoyable by making sure to follow tips such as:

  • Customers should review their insurance policy and understand their rights and responsibilities. They should also cooperate with their adjuster and provide all relevant information and documentation about their loss.
  • Claims professionals should inspect the loss site thoroughly and document every detail with photos and videos. They should also use reliable sources and tools to obtain accurate and current costs for each item or component.
  • Both parties should maintain open and honest communication with each other throughout the estimating process. They should also be flexible and willing to compromise if necessary.

Estimating is a vital process in the claims handling industry that can help customers recover from their losses and claims professionals deliver quality service. I follow these tips myself which make estimating a positive experience for everyone involved.

You can find out more about another common occurrence in the claims handling industry called supplementing by clicking here.


  1. https://www2.deloitte.com/us/en/insights/industry/financial-services/insurance-claims-transformation.html
  2. https://blog.reduceyourworkerscomp.com/2011/03/15-benchmarks-measure-claim-excellence-by-workers-comp-adjusters/

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