Restoration Industry Glossary

Actual Cash Value

The replacement cost of damaged property minus depreciation. ACV represents the current market value of the item at the time of loss, accounting for age, wear, and condition. Insurance policies that pay on an ACV basis will deduct depreciation from the claim payout.

Adjuster

A licensed professional employed by or contracted with an insurance company to evaluate property damage, determine the scope of loss, and negotiate the claim payout. Staff adjusters work directly for the insurer, while independent adjusters are contracted on a per-claim basis. The adjuster's estimate is the starting point for negotiations.

Air Scrubber

A portable HEPA filtration device that removes airborne contaminants including mold spores, dust particles, and volatile organic compounds from the indoor environment. Air scrubbers are used during remediation to maintain air quality within containment areas and are typically run continuously until clearance testing is passed.

Business Development Manager

A senior sales role responsible for managing strategic partnerships, negotiating DRP agreements, and overseeing the business development team. BDMs focus on high-value relationships with insurance carriers, TPAs, and large property management companies.

Business Development Representative

A sales and marketing role focused on generating new leads and building relationships with referral sources such as insurance agents, property managers, plumbers, and real estate professionals. BDRs typically work in the field, conducting door-to-door visits, attending networking events, and managing drip campaigns.

Category 1 Water

Clean water from a sanitary source that does not pose a health risk. Examples include broken supply lines, overflowing sinks with no contaminants, and rainwater intrusion. Category 1 water can degrade to Category 2 or 3 if left untreated for more than 48 hours.

Category 2 Water

Water containing significant contamination that could cause illness if ingested. Sources include washing machine overflow, dishwasher discharge, and toilet overflow with urine (no feces). Category 2 water requires more aggressive remediation protocols than Category 1.

Category 3 Water

Grossly contaminated water containing pathogenic agents, toxins, or other harmful substances. Sources include sewage backup, flooding from rivers or streams, and standing water that has supported microbial growth. Category 3 water requires full PPE, containment, and specialized remediation protocols.

Certificate of Completion

A formal document confirming that all restoration work has been completed according to the approved scope of work and meets industry standards. The COC is signed by the contractor and often the property owner, and is submitted to the insurance carrier to trigger final payment release.

Change Order

A formal modification to the original scope of work that documents additional, removed, or altered work items. Change orders must be approved by the property owner and/or insurance carrier before the work is performed. They protect the contractor from disputes over unauthorized work.

Containment

Physical barriers constructed to isolate affected areas during remediation work. Containment prevents the spread of contaminants (mold spores, asbestos fibers, dust) to unaffected areas of the structure. Containment typically uses polyethylene sheeting, negative air pressure, and sealed entry/exit points.

Contents

All personal property inside a structure, including furniture, electronics, clothing, documents, and other belongings. Contents claims are handled separately from structural claims and involve inventorying, packing, cleaning, storing, and returning items. Contents work includes pack-out, cleaning, storage, and pack-back phases.

Cycle Time

The total elapsed time from the first notice of loss (FNOL) to project completion and final payment. Cycle time is a critical KPI for restoration companies because shorter cycle times improve cash flow, increase capacity, and improve customer satisfaction. Industry benchmarks vary by loss type but typically range from 30-90 days for water losses.

Deductible

The amount a policyholder must pay out of pocket before insurance coverage begins. Deductibles can be a fixed dollar amount or a percentage of the insured value. For restoration contractors, understanding the deductible is essential for setting client expectations on their financial responsibility.

Depreciation

The decrease in value of property over time due to age, wear, and condition. In insurance claims, depreciation is calculated as the difference between the replacement cost and the actual cash value. Recoverable depreciation can be claimed after repairs are completed on RCV policies.

Direct Repair Program

A preferred contractor agreement between a restoration company and an insurance carrier. DRP contractors receive direct referrals from the insurer in exchange for agreed-upon pricing, response times, and quality standards. Also known as program work, DRPs provide a steady stream of leads but often come with margin constraints.

Dispatch

The process of assigning field crews, vehicles, and equipment to specific jobs based on availability, location, skill set, and priority. Effective dispatch minimizes drive time, maximizes utilization, and ensures the right crew type is matched to the right job type.

Emergency Services

The 24/7 response capability that restoration companies maintain to handle urgent property damage situations. Emergency services include water extraction, board-up, tarping, and temporary power. Response time — typically measured as time from call to on-site arrival — is a critical competitive differentiator and DRP requirement.

First Notice of Loss

The initial report filed with an insurance company when a policyholder experiences property damage. FNOL triggers the claims process and typically includes the date of loss, type of damage, and basic property information. For restoration contractors, receiving the FNOL is the starting point of the entire project lifecycle.

IICRC

The leading certification body for the restoration industry. IICRC sets the standards for water damage restoration (S500), fire and smoke restoration (S520), mold remediation (S520), and other restoration disciplines. IICRC certifications (WRT, FSRT, AMRT) are required by most insurance carriers for contractor eligibility.

LiDAR

A remote sensing technology that uses laser pulses to measure distances and create precise 3D models of physical spaces. In restoration, LiDAR scanning replaces manual measurement with tripod-mounted devices or smartphone-based scanners, producing accurate floor plans, room dimensions, and surface area calculations in minutes.

Line Item

An individual entry in a restoration estimate representing a specific material, labor task, or equipment charge. Each line item includes a description, quantity, unit of measure, unit price, and total cost. Xactimate estimates can contain hundreds of line items for complex losses.

Loss of Use

Insurance coverage that pays for additional living expenses when a policyholder is displaced from their home during repairs. Also known as Additional Living Expenses (ALE), this coverage typically includes temporary housing, meals, and other costs above the policyholder's normal living expenses.

Mitigation

The emergency response actions taken immediately after a loss to prevent further damage to the property. Mitigation includes water extraction, emergency board-up, roof tarping, debris removal, and setting up drying equipment. Mitigation is typically the first phase of a restoration project and is billed separately from reconstruction.

Moisture Mapping

The process of systematically measuring and documenting moisture levels throughout a structure using moisture meters and thermal imaging cameras. Moisture maps are created at the start of drying and updated daily to track progress. They serve as documentation for the insurance carrier and guide equipment placement decisions.

Overhead & Profit

The standard markup applied to restoration work, typically calculated as 10% overhead plus 10% profit on the total job cost. O&P compensates the general contractor for project management, coordination, and business expenses. Carriers sometimes dispute O&P, making it a common point of negotiation.

Pack-back

The process of returning a policyholder's personal belongings from storage back to the restored property. Pack-back includes unpacking, placing items in their designated locations, and obtaining the homeowner's sign-off. This is the final phase of contents work.

Pack-out

The process of inventorying, photographing, packing, and transporting a policyholder's personal belongings from the damaged property to a secure storage facility. Each item is documented with photos and condition notes. Pack-outs are typically required for large losses where the property will be uninhabitable during repairs.

Photogrammetry

The science of creating 3D models and measurements from overlapping photographs. In restoration, photogrammetry is used alongside or as an alternative to LiDAR for documenting property conditions, capturing exterior measurements, and creating visual records of damage. Modern smartphone cameras can produce photogrammetric models with sub-inch accuracy.

Price List

Xactimate's regional pricing database that contains labor rates, material costs, and equipment charges specific to a geographic area. Price lists are updated monthly by Verisk and reflect current market conditions. Contractors and adjusters must use the same price list version to ensure estimate consistency.

Public Adjuster

A licensed claims professional who represents the policyholder — not the insurance company — in negotiating property damage claims. Public adjusters typically charge a percentage of the claim settlement (usually 10-15%) and advocate for the highest possible payout on behalf of the property owner.

Reconstruction

The process of rebuilding and restoring a property to its pre-loss condition after mitigation and remediation are complete. Reconstruction includes structural repairs, drywall installation, painting, flooring, cabinetry, and finish work. This phase typically represents the largest portion of the project cost.

Remediation

The process of removing hazardous contaminants from a property, most commonly mold, asbestos, or lead paint. Remediation follows strict protocols including containment, air filtration, removal of affected materials, and clearance testing. Remediation must be completed before reconstruction can begin.

Replacement Cost Value

The full cost to repair or replace damaged property with materials of like kind and quality, without any deduction for depreciation. RCV policies pay the actual cost to restore the property to its pre-loss condition. The difference between RCV and ACV is the recoverable depreciation.

Restoration Industry Association

The national trade association representing the restoration industry. RIA provides advocacy, education, certification programs, and networking opportunities for restoration contractors, consultants, and suppliers. RIA membership signals professionalism and commitment to industry standards.

Scope of Loss

The adjuster's written, line-by-line inventory of all damage at a property and the estimated cost to repair it. The scope of loss defines what the insurance company is willing to pay for and serves as the baseline for negotiations. Also referred to as the scope of work when describing the contractor's repair plan.

Sketch

A scaled floor plan or diagram of a property showing room dimensions, wall lengths, door and window placements, and other structural features. Sketches are required for Xactimate estimates and serve as the foundation for calculating material quantities and labor hours.

Subrogation

The legal right of an insurance company to pursue a third party that caused the loss in order to recover the amount paid on the claim. For example, if a neighbor's negligence caused water damage, the insurer may subrogate against the neighbor's policy after paying the claim.

Supplement

Additional line items or costs added to an insurance estimate after the initial scope of work has been written and approved. Supplements are filed when hidden damage is discovered during repairs, when the original scope was incomplete, or when code upgrades are required. Proper supplementing is critical to contractor profitability.

Third-Party Administrator

An organization that processes insurance claims on behalf of insurance carriers. TPAs manage the claims workflow, assign adjusters, and oversee the repair process. Restoration contractors often work with TPAs as intermediaries between themselves and the insurance company.

Utilization Rate

The percentage of available work hours that are actually billed to jobs. Utilization rate measures how efficiently a restoration company deploys its field crews. A utilization rate of 85% or higher is considered excellent, while rates below 65% indicate significant scheduling inefficiency or excess capacity.

Work Order

A document that authorizes and describes specific work to be performed at a job site. Work orders include the scope of work, assigned crew, scheduled dates, materials needed, and any special instructions. They serve as the operational link between the office and the field.

Xactimate

The industry-standard estimating software developed by Verisk Analytics, used by insurance carriers, adjusters, and restoration contractors to create detailed repair estimates. Xactimate uses regional pricing databases updated monthly and produces line-item estimates that serve as the basis for claim negotiations.