What Is A Scope Of Loss - Damage And Insurance

If My Property Suffers Damage Do I Need A Scope of Loss?
By: Ronald R. Reitz, CPPA



For many people that suffered losses to their properties following the 2007 Southern California wildfires, the phrase Scope of Loss has become an all too familiar term. However, many homeowners do not fully understand the value of a Scope of Loss and whether or not they will really need one following a disaster or fire.

A Scope of Loss is a detailed, line-item breakdown of all the items and services necessary to rebuild or repair a damaged property. One can refer generally to a Scope as the extent of the loss. Most commonly, a Scope of Loss will be broken down by room and trade so one can easily identify all damages that are being addressed. While most Scopes of Loss include the price associated with each line item, it is not a requirement they be included.

In some occasions, it may be advantageous to not include the price. For example, if you are in the process of obtaining competitive bids from various contractors and they are all bidding on the same items, it is not appropriate to share each of the contractors pricing.

Why An Independent Scope of Loss is Needed


I am often asked why it is necessary for the insured to obtain their own Scope of Loss since the insurer will be creating one. We have found that insureds often need to have an independent opinion of the cost required to rebuild their property and to have a document that includes all insured items.

There are many occasions, especially in a partial loss, where not all damage is covered under the policy. Since it is the insureds duty to prove their loss, they need to know how to properly present it to the insurance company, as well as to have a thorough understanding of what is covered and excluded. Certainly, an insured would not want to claim damages that are excluded in the policy. A Scope of Loss is limited to the damages that are covered or believed to be covered under the insureds policy.

Because a public insurance adjuster will be the expert on the coverages afforded the insured in their policy, the ideal solution is for a public insurance adjuster to work in conjunction with a contractor to produce a Scope of Loss.


The contractor will be much better versed on current prices, on construction costs and changes to building codes than the adjusters. It is true that many construction companies that focus their business on insurance restoration work are able to prepare a Scope of Loss but since contractors are not trained and licensed to understand the complex nature of insurance policies, they are at a disadvantage relative to coverages. By the way, when looking for a public insurance adjuster, remember that not all public adjusters know how to create a Scope of Loss.

Many times an insurer and insured disagree on the extent or scope of their loss. In addition, the insurer and insured also have different opinions on the coverages their insurance policy affords them.


A Scope of Loss is a great tool for the insured to help narrow those differences.


If you only have one opinion (the insurers), how are you able to determine the reasonableness of an insurers settlement offer? An independent opinion is a much better way to truly know how fair the settlement offer is. A properly prepared Scope of Loss is also great tool for the insured to know whether an offer from their insurance carrier to settle their claim is reasonable.

I would encourage anyone that has suffered an insured loss to obtain an independent Scope of Loss so that you can make informed decisions about settling your claim.


Author Bio - Ronald R. Reitz, CPPA, President of Quality Claims Management, , pioneered the National Hazard Insurance Claims business of GMAC-RFC (now GMAC-ResCap). Mr. Reitz left GMAC-ResCap in January 2007 after ten years of managing the Insurance Services group. He is the past President of the California Association of Public Insurance Adjusters (CAPIA) and is currently an officer on the Board of Directors of the National Association of Public Insurance Adjusters (NAPIA). Recognized as a leading expert on hazard claims, he is serving on many industry panels, as well as providing consulting and training services industry-wide.

Quality Claims Management Corporation provides hazard claim recovery services to investors, mortgage servicers, homeowners and businesses. All claims are adjusted by licensed insurance professionals for an equitable settlement and accelerated resolution timelines. Quality Claims is nationally licensed as Public Insurance Adjusters or Insurance Consultants and complies with Department of Insurance Regulations