Anyone who has ever filed a claim for damages to their home has wondered if there’s some magic formula the insurance adjuster uses to assess the damage. The dollar amount assigned is often far different than expected.

Some types of loss, such as missing electronics from a break-in, are easy to see. However, damage due to a fire, for example, is far more complicated to assess. It requires experience, knowledge, and an understanding of construction methods.

It’s important to know that an adjuster from the insurance company works for the insurer. He/she is tasked with upholding the terms of the policy, while saving the insurance company as much money as possible.

An adjuster documents the damage and verifies the cost of materials to rebuild. A knowledge of construction processes is essential to ascertain if structural damage has occurred. The insurance adjuster will typically require the homeowner to document their losses and the cause of the damage, such as a burst pipe, hail, or windstorm.

The goal is to ensure the home was sound before the claim was made. The insurance adjuster is also seeking to discover if something the homeowner did or didn’t do could have prevented the damage.

Most insurance adjusters use a specialized program developed for the insurance industry to arrive at their assessment. It has the ability to assess damage room by room. The drawback is that even a small error in measurement can disrupt the estimate by as much as 10 to 20 percent, which affects the amount of compensation the insurer pays.

There’s a certain amount of waste, usually 5 percent, associated with any building project, as 100 percent of every item isn’t used. Most insurance adjusters figure this into their computations, along with contractor costs. Market conditions can also be included.

Adjusters also have a cost database from which they draw information for assessments. If any of those factors aren’t accurate, or the cost of inflation isn’t accounted for, the reimbursement amount for rebuilding may not be sufficient.