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company adds their markup and submits the estimate in a lump sum format. The lump sum format
lists the scope of work, and a lump sum (total cost) is listed at the bottom. The carrier never really

knows the actual cost the contractor is charging nor the amount of the added markup. All the
carrier knows is the narrative scope and the bottom-line cost. Some carriers require multiple bids
however unless you have an agreed scope of work with a specific design, the contractor’s bids

are meaningless and reflect their concepts alone.

Workers’ compensation carriers might want to take a closer look at their property insurer

counterparts. Property insurance claims departments have specific methods and systems
designed to standardize process and manage costs related to the damage to physical structures.
If an entire industry, that handles nothing but property claims, has established systems and

protocols to manage costs, it would seem obvious that workers’ compensation carriers might want
to consider the opportunity to adopt some of those practices with their own property related
assignments.

Home modifications are considered a medical benefit however they involve a physical structure
and require construction services. Estimating for construction can be completed in various ways

however, the property insurance industry uses unit price estimating systems as a way to
standardize the estimating process and develop consistency with pricing. While there are several
unit price estimating systems on the market, the most recognized and most widely used system

is called Xactimate. Xactimate is a software system for estimating the cost of repairs and
reconstruction for residential and small commercial structures. Xactimate is a national company
that establishes accurate local pricing based on several factors. The property industry considers

the pricing included in Xactimate to be reasonable and claims are settled accordingly.

The estimate is presented in a very detailed line-item format showing where every penny is going.

It’s the carrier’s responsibility to determine the approved scope of work. If the contractor is
provided the detailed scope of work, and if the contractor uses a system like Xactimate, the carrier
can be relatively confident that the pricing for the job is reasonable.

The survey showed that according to workers’ compensation insurance professionals, the biggest
challenge with home modifications was finding a qualified contractor. The second answer was

developing an accurate scope of work. The third was communication and documentation. And
the fourth challenge was related to cost. In reality, all of these challenges are inner connected.
The right contractor, provided with an accurate scope, using the correct estimating system, are

all part of a healthy home modification program. Some carriers that manage a lot of catastrophic

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