Scope Agreement
A written document signed by the contractor, homeowner, and sometimes the insurance carrier that confirms the agreed-upon scope of work, materials, and pricing before restoration work begins. Prevents disputes about what was included in the project.
What Is a Scope Agreement
A scope agreement is a formal, signed document that establishes the exact work to be performed, the materials to be used, the timeline, and the financial terms before any restoration or construction work begins, serving as the binding reference point that prevents disputes about what was and was not included in the project. It is not the same as a sales contract. A scope agreement is specific enough that both parties can point to it and say "this is exactly what we agreed to."
What a Scope Agreement Should Include
A complete scope agreement includes a detailed description of work by area and trade, material specifications (manufacturer, product, color), the approved Xactimate estimate or line item summary, the payment schedule and terms, the change order process for additional work, the expected timeline, and signatures from the contractor and homeowner. On insurance restoration jobs, it should also reference the carrier's approved scope and identify any known items that are pending supplement approval.
Scope Agreements and Insurance Claims
The scope agreement bridges the gap between the insurance estimate and the actual work. The carrier's estimate defines what they will pay for. The scope agreement defines what the contractor will do. When these do not perfectly align (and they rarely do), the scope agreement should clearly state which items are approved, which are pending supplement, and what the homeowner's financial responsibility is for any items not covered by insurance. This transparency prevents the most common source of conflict on insurance restoration projects: the homeowner expecting more work than the insurance payment covers.
Frequently asked questions
A scope agreement is a written document that defines exactly what work will be performed, what materials will be used, what the cost will be, and who is paying. It is signed by the contractor and homeowner (and sometimes the carrier) before work begins. It protects all parties by establishing clear expectations.
On insurance jobs, the scope of work is often dictated by the carrier's estimate, which may differ from the contractor's assessment. A scope agreement that references the approved estimate, identifies known supplement items, and defines the change order process prevents the homeowner from expecting work that is not funded and the contractor from performing work that will not be paid.
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