State Farm uses Xactimate's 'New Construction Labor Efficiency' setting to systematically underpay homeowners insurance claims by an estimated 30%

Verisk's Xactimate software is used by virtually all major property insurers to estimate repair costs for homeowner claims. State Farm and other insurers have been accused of configuring Xactimate with 'New Construction' labor efficiency settings, which assume streamlined, predictable construction processes. However, insurance repair work involves demolition, hazmat abatement, matching existing materials, and working in occupied homes, which is inherently more expensive than new construction. Xactimate itself now disclaims the accuracy of its pricing data in its End User Licensing Agreement. Why it matters: Homeowners receive repair estimates 20 to 30% below actual contractor costs, so they must either accept substandard repairs, pay the difference out of pocket, or enter protracted disputes with their insurer, so homeowners in lower-income areas who cannot afford the gap live with inadequately repaired homes, so structural damage from water intrusion or improper fixes compounds over time, so properties lose value and neighborhoods deteriorate as accumulated deferred maintenance creates cascading decline. The structural root cause is that Xactimate holds a near-monopoly on property claims estimating software, and Verisk (its parent company) derives significant revenue from insurance companies that are its primary customers. The software's pricing database reflects what insurers want to pay rather than what repairs actually cost, and homeowners lack the technical knowledge to challenge algorithmically generated estimates. Xactimate's own EULA now states: 'We do not warrant the accuracy of pricing information in the Price Data.'