One of the most consequential Xactimate updates in recent years arrived in February 2026: Verisk expanded the labor efficiency architecture from two models to three. The new Large Restoration/Remodel option fills a long-acknowledged gap between service-level work and full rebuild scenarios. For restoration operators handling mid-sized losses, the change is meaningful — and using the wrong model is a fast way to mis-price the labor on a job.
This article assumes you understand how Xactimate fits into the broader pricing workflow. For that context, start with our restoration pricing and estimating master guide.
The Old Two-Model Architecture
Before the February 2026 update, Xactimate offered two labor efficiency models: a service-level model for small-scope, single-trade work and a restoration/remodel model for larger rebuilds. The two-tier architecture worked well at the extremes but struggled in the middle.
Mid-sized restoration jobs — partial kitchen rebuilds after water loss, multi-room fire cleanup, large mold remediation projects — did not align cleanly with either model. Estimators routinely made judgment calls or layered manual workarounds to bridge the gap. The result was inconsistent labor pricing across similar jobs, depending on which estimator built the estimate.
What the New Three-Model Architecture Looks Like
The 2026 update keeps the existing service-level and restoration/remodel models and adds a third tier — Large Restoration/Remodel — designed for mid-sized work that involves multiple trades, longer durations, and more complex coordination than a service-level job, but does not reach the scale of a full rebuild.
The practical effect is that estimators now have a defensible, system-supported choice for the work that previously required manual workarounds. This produces more consistent labor pricing across a portfolio of jobs and reduces the audit exposure that comes from improvised efficiency selections.
How to Choose Between the Three Models
The right model selection depends on job characteristics. Verisk’s documentation provides detailed selection criteria, but the field-level shorthand most experienced estimators use looks like this:
- Service-level — single-trade, short-duration, minimal coordination, typical small water mitigation or single-room work
- Large Restoration/Remodel — multi-trade, multi-week duration, moderate coordination, mid-sized fire/water/mold or partial rebuild
- Restoration/Remodel — full rebuild scope, long duration, full general contracting coordination, large losses
The Large Restoration/Remodel tier is the one most likely to be under-used initially because it is new and unfamiliar. Operators should review recent estimates that fell awkwardly between the two prior models and identify which would now fit the new tier.
Why Labor Efficiency Matters for Margin
Labor efficiency in Xactimate is not a discount or a multiplier — it is a coefficient that adjusts labor hours based on the type of work being performed. The same line item carries different labor hours under different efficiency models, because a service-level repair really does take less coordination overhead than a large rebuild.
Selecting the wrong efficiency model on a job can shift the estimated labor by 10 to 25 percent, which is the difference between a profitable job and a job that loses money on labor underestimation.
How TPAs Are Adopting the New Model
TPA programs typically take a quarter or two to fully integrate new Xactimate methodology updates into their audit and review workflows. During the transition, expect inconsistency across reviewers — some will accept Large Restoration/Remodel selections without question, others will challenge them. Documenting the reasoning for the model selection in the estimate notes is the best defense.
What to Update in Your Estimating Process
Three things to update now that the three-model architecture is live: estimating templates should include the new Large Restoration/Remodel option as a standard selection for qualifying scopes, training materials should be refreshed to cover when to use each tier, and audit checklists should include a labor efficiency model review as a standard line item.
Frequently Asked Questions
What changed in Xactimate’s 2026 labor efficiency update?
Verisk expanded the labor efficiency architecture from two models to three by adding the Large Restoration/Remodel option. The update was presented in February 2026 and is designed to bridge the gap between service-level work and full rebuild scenarios for mid-sized restoration jobs.
When should I use the Large Restoration/Remodel labor efficiency model?
Use it for mid-sized jobs that involve multiple trades, multi-week duration, and moderate coordination but do not reach the scale of a full rebuild. Common examples include partial kitchen rebuilds after water loss, multi-room fire cleanup, and large mold remediation projects.
How much can the wrong labor efficiency model affect my estimate?
Selecting the wrong efficiency model can shift the estimated labor on a job by roughly 10 to 25 percent depending on the scope. On a $30,000 estimate, that is $3,000 to $7,500 of labor either over- or under-stated. The model choice is a meaningful margin lever, not a minor technical detail.
Do TPAs accept the new Large Restoration/Remodel model?
Yes, but adoption is uneven during the early months after the release. Some reviewers accept the new tier without question, others challenge it. The best practice is to document the reasoning for the model selection in the estimate notes so the choice is defensible if questioned.
Where can I learn more about the 2026 Xactimate labor efficiency update?
Verisk has published webinar content covering the updated labor efficiencies architecture in detail. The on-demand webinar is the authoritative source for the methodology and selection criteria. Operator-level training providers have also begun including the new tier in their X1 curricula.
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