Looking for an auto insurance claims business plan? You're in the right place.
An independent claims firm lives on a few answers. How many vehicles can one appraiser inspect in a month? What happens to cash when a hail season is mild, or when an insurer takes six weeks to pay? How much does the first big client matter? A blank template won't show you what a sensible answer looks like.
In this article we'll walk through a complete sample business plan for an independent auto claims appraisal firm in Columbus, Ohio, section by section, so you can see how the work is priced, staffed and funded. We'll cover the executive summary, the SWOT analysis and, in particular, all of the financials.
Here's what you'll take away:
- The executive summary: see how to describe a fee-per-claim business on one page, so a reader can see what the firm sells and what it is asking for
- The SWOT analysis: learn how to name a heavy reliance on one insurer without losing the reader
- The capacity table: check how many inspections your team can complete against the assignments your revenue line counts
- The start-up budget: find out how large a cash reserve a firm needs when insurers pay about 38 days after the report
- The first year, month by month: see how a hail event and a winter ice event move revenue, and plan around the months that lose money
- The five-year profit, cash flow and balance sheet: understand how each hire, mileage cost and fee increase shows up in the numbers
- The downside case: have an answer ready for the "what if revenue is 20% short?" question, with the steps the owner takes in response
If you're setting up a claims or appraisal firm, read this before you write your own. The firm is fictional, so take what fits your business and change the rest.
In this plan
Looking for a auto insurance claims business plan template? The Toolkit builds yours with your own numbers.
Executive Summary
Scioto Claims & Appraisal is an independent auto claims appraisal firm that opens in Columbus, Ohio on 1 January 2027. It takes assignments from auto insurers and body shops and is paid a fee for each claim it completes: field appraisals, desk reviews of estimates and supplements, body shop and fleet reports, and, after hail, wind and ice events, catastrophe response. Founder Dale Kowalski owns 100% of the firm.
The firm needs $200,000: $130,000 of Dale's savings and a $70,000 bank term loan. Of that, $161,500 is held as a cash reserve, $21,000 buys appraiser kits and office fit-out, and $17,500 pays for legal work, insurer credentialing and the launch.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Revenue | $467,575 | $841,356 | $1,130,919 |
| Net income after start-up costs | ($41,913) | $40,370 | $102,826 |
| Closing cash | $89,047 | $86,648 | $114,553 |
The firm opens with one regional insurer's overflow panel and ten body shops that have agreed to receive its reports. It completes 3,245 assignments in Year 1 and by December 2027 works for three insurer programs and 24 repeat body shops and fleets. Year 1 loses money at the operating line, with EBITDA of ($12,647), because the firm pays a field appraiser and a desk estimator from the first quarter, before assignments arrive in volume. Operating profit appears in May, June and July and again from September to December. The first full-year profit comes in Year 2.
Revenue swings with the weather. A hail event in June accounts for $33,750 of that month's $68,710. A year without hail or wind removes $63,000 of Year 1 revenue, and a year with no catastrophe work at all removes $82,125. The reserve is sized for that. Suppose revenue runs 20% under plan. If Dale delays hiring, drops the last hire, trims marketing and his own pay, keeps the first office and pays no distributions, cash stays above zero at every year end in the model.
What sets the firm apart is operational. An appraiser inspects the vehicle within one working day of the assignment, the report is delivered within two, and a senior appraiser reviews any file that a shop or an insurer disputes.
About Scioto Claims & Appraisal
Legal name: Scioto Claims & Appraisal, LLC, an Ohio limited liability company. Owner: Dale Kowalski, 100%. Premises: about 800 square feet of leased office space in Columbus, with appraisers working from their own vehicles. Start date: 1 January 2027. Stage: pre-launch. One regional insurer has approved the firm for its overflow panel, a lease is in draft, and ten body shops have agreed to receive its reports.
What the firm is for
Give insurers and body shops a fast, documented and fairly priced assessment of collision damage in central Ohio, for a fixed fee per claim.
Goals through 2029
- Three insurer programs and 24 repeat body shops and fleets by December 2027, up from one program and ten shops at launch.
- Revenue of $841,356 in 2028 and a profit once tax is paid.
- No single insurer above 40% of revenue by 2029.
- A team of six on full-time pay by the close of 2028, Dale among them, with a part-time claims coordinator alongside.
- Repay the bank loan on schedule and begin owner distributions in 2029.
Fee schedule and revenue mix
| Service | How it is priced | Year 1 share of revenue |
|---|---|---|
| Insurer field appraisals: inspection, photographs, estimate and report | $200 per completed assignment | 47.9% |
| Desk reviews, supplements and re-inspection reviews | $75 per file | 25.7% |
| Body shop and fleet reports: pre-repair, post-repair and repair-cost reports | $265 per report | 8.8% |
| Catastrophe response after hail, wind and ice events | $225 per claim | 17.6% |
Fees rise 3% a year from Year 2. The plan sets these fees for the example. Insurer vendor rates are set in private contracts, and no published fee schedule for independent auto appraisers in Ohio was found.
Licensing in Ohio
Ohio licenses public insurance adjusters, who act for policyholders, through the Ohio Department of Insurance. The National Insurance Producer Registry's Ohio page lists public insurance adjuster as the adjuster licence class it processes. Scioto works for insurers and body shops, not for policyholders, so it does not operate as a public adjuster and does not negotiate claims for claimants.
The plan does not rule out other licences applying to an independent appraiser. As a diligence step, Dale asks the Department in writing which licences, if any, apply to the firm's assignment types, and he does so before he signs the lease. The reply goes on file. Insurer vendor agreements can set their own credential, insurance and background-check terms, and the firm budgets $3,000 for credentialing and business licences. A licence fee or bond beyond that is treated as a risk item: the model does not include it, and the reserve would absorb it.
The Central Ohio Claims Market
Who does this work
The Bureau of Labor Statistics counted about 13,500 jobs for auto damage appraisers nationally in 2025, with a median wage of $78,240 in May 2025. Only 2% were self-employed, which shows how the work is organised: nearly all appraisers are employees of insurers or other firms, and an independent appraisal business is a small corner of the occupation. The BLS projects employment for auto damage appraisers to fall 9% from 2025 to 2035, a loss of about 1,200 jobs.
The plan does not read that outlook as good news. Its bet is narrower: that insurers keep staff appraisers for steady volume and buy outside capacity for overflow, for events and for regions where staffing a full office is not worth it. That is a view about buying behaviour, not a BLS finding, and it is the first thing the downside case tests.
What drives volume
Collision claims in central Ohio follow the weather and the calendar. Winter ice and snow raise collision counts from December to February. Hail and wind events in spring and summer produce short bursts of vehicle damage claims that exceed any carrier's staffing. The plan builds both in: one moderate hail and wind event each year plus a winter ice event, with 365 catastrophe claims in Year 1. Insurers and shops do not publish assignment volumes, so the plan sizes the firm by capacity, meaning how many vehicles its appraisers can inspect, and not by a share of a market total.
What an assignment pays
Per-assignment fees for independent appraisers are not published. The plan's fees are $200 for a field appraisal, $75 for a desk review, $265 for a shop or fleet report and $225 for a catastrophe claim, with an average of about $144 across all Year 1 assignments. Each is a working figure, to be replaced by the rate in a signed vendor agreement.
Competition
| Alternative | What it offers | Why a client picks it | How Scioto differs by design |
|---|---|---|---|
| Insurer staff appraisers | Salaried employees of the carrier | Direct control and no per-claim fee | Takes overflow when staff are full or after an event |
| Photo and self-service estimating | App-based capture and remote estimate | Fast and low cost for minor damage | Sends a person to the vehicle when damage needs one |
| National third-party administrators and independent adjusting firms | Multi-state appraisal and adjusting panels | One vendor across many states | Local response in central Ohio on a set turnaround |
| Regional independent appraisal firms | Local field appraisals for carriers | Established insurer relationships | Serves insurers and shops, with a quality review before any report goes out from Year 3 |
| Body shop in-house estimators | The shop's own estimator writes the repair plan | No extra fee | Independent review of supplements, and reports for fleets |
The table sets out what each alternative offers and where Scioto positions itself. Fees and vendor terms are private or change often, so none are quoted, and individual firms are left unnamed because most do not publish rates.
SWOT
| Strengths | Weaknesses |
|---|---|
| Founder with 14 years of auto damage appraisal and team leadership | One senior appraiser: when Dale is away, disputed files wait |
| One insurer panel approved and ten shops signed before opening | No track record as a vendor; every insurer starts with trial assignments |
| Fee per claim, so the firm earns only on completed work | More than half of Year 1 field and desk work comes from one insurer |
| Opportunities | Threats |
|---|---|
| Insurers adding vendors for overflow and event response | Insurers moving more minor claims to photo estimating |
| Body shops and fleets wanting an independent repair-cost report | A quiet storm season removing catastrophe revenue |
| Hail and ice events that bring claims faster than staff can inspect | A larger firm discounting to win a panel place, or a licence cost the plan has not budgeted |
Who Sends the Work
The insurer or administrator with overflow
The buyer is a claims manager at a regional or specialty auto insurer, or at a third-party administrator, with policyholders in central Ohio and too few staff appraisers to inspect every vehicle quickly. Speed to close and accuracy of estimates are the measures, and both come under review when a claim is reopened.
How overflow is handled now
Overflow often goes to a national appraisal network, or complex claims go to a staff appraiser two counties away while photo estimates cover the rest. A common failure is a delay of several days between a loss and an inspection, with the vehicle sitting at a shop that cannot start repairs.
Triggers for a new vendor
A backlog after a hail or ice event, a new office with no local staff, a vendor whose reports are late or inconsistent, or a rise in supplements that nobody reviews.
The body shop and the fleet
An independent body shop wants a supplement reviewed quickly and a pre-repair or post-repair report it can hand to an insurer. A rental, delivery or municipal fleet wants an independent view of repair cost before it approves a bill. These customers pay $265 per report.
Order of priorities
In order: the inspection happens when promised, the photographs and estimate hold up on review, the report arrives in the insurer's format, and the fee does not change from claim to claim.
Winning Panel Seats and Shop Accounts
How an assignment is won
For an insurer: a vendor application and credentialing, a short trial of 20 assignments, a review of the results with the claims manager, and a signed rate agreement. For a body shop: a visit by an appraiser, a sample report on one of its own jobs, and a per-report price. Dale handles every insurer conversation in Year 1.
Accounts to win in 2027
The firm opens with one insurer panel and ten shops, and adds 16 accounts during the year: two further insurer or administrator programs and 14 shops and fleets.
| Source of new accounts | Accounts won |
|---|---|
| Insurer and administrator vendor applications | 2 |
| Body shop visits and referrals from existing shops | 9 |
| Fleet operators, through introductions | 2 |
| Trade association events and meetings | 3 |
| Total | 16 |
Insurer programs arrive in months 5 and 9, after trial periods, and the second field appraiser is timed to the volume the third program is expected to send.
Pricing
Fees are charged per completed assignment and rise 3% a year from Year 2. A field appraisal covers mileage inside an average 30-mile loop, and the firm neither charges by the hour nor takes a share of any repair or settlement.
Concentration
In Year 1 the first insurer supplies more than half of field and desk work. The plan sets a limit of 40% of revenue for any one insurer by 2029 and meets it by adding programs, not by turning work away. Losing the first insurer is the largest single risk in the plan; the reserve and the 20% downside case are the response.
Growth
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Field appraisals | 1,120 | 1,900 | 2,400 | 2,800 | 3,000 |
| Desk reviews | 1,605 | 3,000 | 4,000 | 4,600 | 5,100 |
| Body shop and fleet reports | 155 | 290 | 400 | 480 | 530 |
| Catastrophe claims | 365 | 600 | 800 | 900 | 950 |
Growth slows after Year 2 because inspection capacity, not demand, becomes the limit. Hires follow assignments, so the firm declines overflow it cannot inspect on time and does not accept work it would deliver late.
Reaching Insurers and Shops
Where the $35,000 goes
Marketing in 2027 totals $35,000, of which $9,000 is launch work paid from the start-up capital and $26,000 is ongoing spend. That equals 7.5% of Year 1 revenue, falling to 2.7% in Year 3 and 2.1% in Year 5 as repeat work takes over. Spread over 16 new accounts, Year 1 costs about $2,190 per account, the fees from about eleven field appraisals.
| Channel | Year 1 spend | What it is expected to do |
|---|---|---|
| Website, brand and capability pack (launch) | $4,500 | A clear site, a one-page capability summary and a standard credentialing pack for insurer vendor applications |
| Panel applications and credentialing documents (launch) | $1,500 | Applications to the vendor-management teams of regional insurers and administrators |
| Shop outreach kits and first visits (launch) | $3,000 | Sample reports and a first visit to the first 20 body shops |
| Body shop visit programme | $7,500 | Regular visits and short training sessions on photographing damage for supplements; about 9 accounts |
| Insurer and administrator outreach | $3,500 | Vendor applications, trial assignments and quarterly reviews with claims managers; 2 accounts |
| Trade association memberships and events | $6,000 | Collision repair and claims association events in Ohio; about 3 accounts |
| Website and local search | $4,500 | Pages for each service, aimed at searches by shops and fleet managers |
| Fleet outreach | $2,500 | Introductions to rental, delivery and municipal fleets; 2 accounts |
| Client reports and thank-you referrals | $2,000 | A quarterly turnaround summary to each client, and a thank-you for each introduction |
Milestones
- January 2027: first insurer panel live and ten body shops receiving reports.
- May 2027: second insurer program approved, ahead of the hail season.
- September 2027: third program active, with about 115 field appraisals a month.
- December 2027: 24 repeat shops and fleets, and $60,800 of revenue in the month including a winter ice event.
How Assignments Get Done
Office space
About 800 square feet in Columbus, priced at about $18 a square foot a year ($14,400 in Year 1), with six desks and a secure room for equipment and files. Appraisers work from their own vehicles and are reimbursed by the mile. The firm moves to about 1,300 square feet in Year 4.
Daily work
An assignment arrives through the insurer's portal or a shop's request. The coordinator schedules an inspection within one working day. The appraiser photographs the vehicle, takes paint-depth and measurement readings, scans for stored codes where the insurer requires it, and writes the estimate in the insurer's estimating platform. The report is uploaded within two working days. Desk estimators review supplements and re-inspection requests from photographs and shop estimates.
Capacity
A field appraiser completes about 80 assignments a month, four a day, and Dale about 50 because of sales and review time. A body shop report counts as two assignments, because it needs a second visit, and a staff-handled catastrophe claim counts as one. A desk estimator completes about 250 reviews a month.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Field-equivalent assignments | 1,576 | 2,720 | 3,520 | 4,120 | 4,440 |
| Field capacity | 1,880 | 3,160 | 4,040 | 4,680 | 5,400 |
| Field utilisation | 84% | 86% | 87% | 88% | 82% |
| Desk reviews | 1,605 | 3,000 | 4,000 | 4,600 | 5,100 |
| Desk capacity | 2,500 | 5,000 | 6,000 | 6,000 | 6,000 |
In Year 1 the field team can inspect 130 assignments a month until the second appraiser starts in month 8, and 210 after. May, June and July need 135, 188 and 164, so about 97 assignments go to vetted contractors, budgeted at $10,000. From August the busiest month, December, needs 199 against 210. Later years are modelled annually, so monthly peaks are covered by a budget for overflow contractors and overtime of $9,000 to $13,000 a year.
Catastrophe surge
After a hail or wind event, claims arrive faster than the team can inspect them. Contract appraisers on 1099 terms handle 60% of catastrophe claims and are paid 60% of the fee for each. The firm checks their credentials and insurance before an event and keeps a list of vetted appraisers. Staff handle the remaining 40% of claims, and the firm pays their mileage.
Vehicles and mileage
Appraisers use their own vehicles. The firm reimburses mileage at the rate the IRS publishes for business use, which its page listed at 76 cents a mile. The plan holds that rate flat, because the 2027 rate is not yet published. An average field loop is about 30 miles, so the reimbursement costs about $23 on a $200 fee. Mileage is a direct cost, so it rises and falls with volume.
Software and platforms
Insurer estimating platforms, a photo-documentation app, claims-management software that tracks every assignment from receipt to payment, and a secure portal for reports. Software costs $18,000 in Year 1 and $40,000 by Year 5.
Headcount by year
The first year ends with four full-time staff (Dale, a field appraiser from month 2, a desk estimator from month 3 and a second field appraiser from month 8) plus a part-time claims coordinator from month 10. That grows to six at the end of Year 2, seven plus a second part-time post at the end of Year 3, and eight at the end of Year 4. Hiring trails assignment volume, and the downside section lists which hires slip or are cancelled when revenue disappoints.
Compliance and insurance
- Written confirmation from the Ohio Department of Insurance, before the lease is signed, of which licences, if any, apply to the firm's assignments (see Company Overview). A licence cost is carried as a risk item.
- Credentialing, background checks and any licences each insurer's vendor agreement requires, including licences in other states if the firm accepts out-of-state event work.
- Written data-handling procedures for claim files, photographs and personal information, to the terms of each insurer's agreement.
- Professional (errors and omissions) liability, general liability, hired and non-owned auto and cyber cover, budgeted at $17,000 in Year 1. Workers' compensation is included in payroll on-costs.
- Written vendor agreements with every insurer and a standard terms sheet for shops and fleets.
Who the firm depends on
Estimating-platform providers, a software host for photos and files, an employment lawyer on call for hiring and contract appraisers, and an accountant. The estimating platforms are set by the insurers, so the firm has little choice there. The rest are easy to replace.
Management Team
Dale Kowalski, founder and lead appraiser
Dale has 14 years in auto claims. He spent nine as a staff auto damage appraiser at a regional insurer's Columbus claims office, then five as a field team lead supervising six appraisers and handling disputed estimates with body shops. His $130,000 investment is savings from that career. He is leaving to run a smaller firm where he still does the inspections himself.
What Dale has not done yet
Dale has not run a sales pipeline from nothing, has not hired and paid contract appraisers, and has not managed a business's books. The plan covers these with a fixed weekly schedule of insurer and shop calls, an employment lawyer on call, and an outside accountant on a monthly retainer.
If Dale is out
Insurers will trust Dale's reports before they trust the firm's. Until the first field appraiser has six months of reviewed files, Dale reviews every disputed estimate himself. A second senior appraiser joins in month 46, so that two people can sign off. Until then a retired claims supervisor on a retainer covers review when Dale is away.
Outside eyes
A retired claims manager reviews the first-year numbers every quarter. Dale uses the Ohio Small Business Development Center network for questions on contracts and hiring.
Ownership and the bank guarantee
Dale is the sole member of Scioto Claims & Appraisal, LLC, and he personally guarantees the bank loan. Quarterly accounts go to the lender as a condition of that loan.
Financial Plan
One five-year model produces everything in this section: a month-by-month view of 2027, then yearly totals. The operating figures come first, so a reader can follow any figure back to its cause. Revenue is the count of assignments completed times the fee for each, and every year's count is tested against how many vehicles the team can actually inspect.
Kits, credentialing and the cash reserve
| Use of funds | Amount |
|---|---|
| Appraiser kits: tablets, cameras, paint-depth gauges, scan tools, measuring gear | $14,000 |
| Office furniture, workstations and secure file storage | $7,000 |
| Insurer panel credentialing, background checks and business licences | $3,000 |
| Legal: entity set-up, vendor agreements, lease review | $5,500 |
| Launch: website, panel applications, body shop outreach | $9,000 |
| Cash reserve for slow-paying months and the first quiet winter | $161,500 |
| Total uses | $200,000 |
| Source of funds | Amount |
|---|---|
| Dale Kowalski's savings | $130,000 |
| Bank term loan | $70,000 |
| Total sources | $200,000 |
Dale puts in $130,000 of his own savings, 65% of the total, and borrows $70,000 from a bank over seven years. The interest rate is 10.5%, with only interest due in the first six months. A personal guarantee and a lien on the appraiser kits serve as security. The rate is a placeholder chosen for this example and does not come from any lender's offer. The $161,500 reserve is deliberately heavy: about four months of Year 1 costs ($480,222, or $40,019 a month). The first winter is quiet, insurers pay in about 38 days, and unpaid invoices climb as volume grows. Holding that cash while borrowing costs $7,266 of interest in Year 1. The loan stays at $70,000 because more debt bought little: in the downside case, $20,000 of extra borrowing lifted the lowest year-end cash only from $24,067 to $28,113, since the added interest absorbed most of it.
What the numbers rest on
- The firm bills per completed assignment: $200 for an insurer field appraisal (inspection, photographs, estimate and report), $75 for a desk review, supplement or re-inspection review, $265 for a body shop or fleet report and $225 for a catastrophe claim. No published fee schedule for independent auto appraisers in Ohio was found, and insurer vendor rates sit in private contracts, so these fees are working figures for the example. Fees rise 3% a year from Year 2.
- Year 1 brings 1,120 field appraisals, 1,605 desk reviews, 155 shop and fleet reports and 365 catastrophe claims: 3,245 assignments at an average of about $144 each. Later years are 1,900, 2,400, 2,800 and 3,000 field appraisals; 3,000, 4,000, 4,600 and 5,100 desk reviews; 290, 400, 480 and 530 reports; and 600, 800, 900 and 950 catastrophe claims.
- Catastrophe work follows one moderate hail and wind event each spring and summer plus winter ice events. In Year 1 that is 25 claims in January, 40 in May, 150 in June, 90 in July and 60 in December. The 280 hail and wind claims are worth $63,000 of Year 1 revenue, and the 85 ice claims $19,125. Contract appraisers on 1099 terms handle 60% of catastrophe claims at 60% of the fee, and staff handle the rest.
- Each year is tested against capacity, and Year 1 against each month. A field appraiser completes about 80 assignments a month, four a day on 20 working days, and Dale about 50 because of sales and review time. A body shop report counts as two assignments because it needs a second visit, and a staff-handled catastrophe claim counts as one. Annual load is 1,576, 2,720, 3,520, 4,120 and 4,440 assignments against capacity of 1,880, 3,160, 4,040, 4,680 and 5,400, which is 84%, 86%, 87%, 88% and 82% utilisation. A desk estimator completes about 250 reviews a month.
- In Year 1 the field team can inspect 130 assignments a month until the second appraiser starts in month 8, and 210 after. May, June and July need 135, 188 and 164, which is 5, 58 and 34 over. That overflow of 97 assignments goes to vetted contractors at 60% of the fee, a cost of about $10,000 after the mileage and fees the fee already covers, and they work to the same one-working-day standard. From August the busiest month is December, at 199 against 210. Years 2 to 5 are annual in the model, so monthly peaks are not shown; overflow contractors and overtime are budgeted at $9,000, $11,000, $12,000 and $13,000.
- Direct costs take 19.7% of revenue in every year: 18% of field appraisal fees (about 11 points of vehicle mileage at an average 30-mile loop and the IRS business rate of 76 cents a mile, and about 7 points of estimating-platform and photo fees), 7% of desk fees, 14% of shop and fleet fees and 46% of catastrophe fees (contract appraiser payments, staff mileage and platform fees). Because mileage is a direct cost, it falls when volume falls.
- Insurers pay about 38 days after the report goes in, and shops and fleets a little later. Receivables are carried at that average across the year, which understates year-end balances when December is busy (see the cash note). A bad debt allowance of about 0.5% of revenue is charged each year.
- Wages carry 27% of on-costs covering payroll taxes, health cover, workers' compensation and a retirement contribution, with 15% for the two part-time roles. Field appraisers are paid $66,000, below the $78,240 national median that the Bureau of Labor Statistics reports for auto damage appraisers, because the firm hires and trains early-career appraisers. Dale takes $85,000. The wages in the staffing table are starting pay; raises of 3% a year appear as their own cost line beginning in Year 2.
- The office is about 800 square feet at roughly $18 a square foot a year, growing to about 1,300 square feet in Year 4. Appraisers drive their own vehicles and are paid by the mile. Insurance covers professional (errors and omissions) liability, general liability, hired and non-owned auto and cyber cover, and grows with headcount and assignments. None of these premiums is a quotation.
- Tax is the federal corporate rate of 21%, with the Year 1 loss carried forward. State and local taxes are not modelled, and an S corporation election, likely in practice, would shift the federal tax to Dale's own return. The 21% rate is a conservative stand-in. If the Ohio Department of Insurance says a licence applies to the firm's work, its fee and any bond are a cost the model does not include, and the $3,000 credentialing and licence budget and the reserve are the first places it would be absorbed.
- Dale draws $40,000, $60,000 and $80,000 in Years 3, 4 and 5, and only where the model shows surplus cash after the year's obligations. Nothing is paid off the loan ahead of schedule, so these draws start while a balance is still owed.
Revenue by assignment type
| Revenue stream | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Insurer field appraisals | $224,000 | $391,400 | $509,232 | $611,927 | $675,305 |
| Desk reviews, supplements and re-inspections | $120,375 | $231,750 | $318,270 | $376,991 | $430,507 |
| Body shop and fleet reports | $41,075 | $79,156 | $112,455 | $138,995 | $158,078 |
| Catastrophe response (hail, wind, ice) | $82,125 | $139,050 | $190,962 | $221,277 | $240,578 |
| Total revenue | $467,575 | $841,356 | $1,130,919 | $1,349,190 | $1,504,468 |
| Growth on prior year | – | 80% | 34% | 19% | 12% |
Field appraisals carry the firm, at 47.9% of Year 1 revenue and 44.9% of Year 5. Desk reviews bring volume rather than value: 1,605 low-fee files make up 25.7% of Year 1 revenue and 28.6% of Year 5. Catastrophe work is the unpredictable stream, 17.6% of Year 1 revenue. It pays the thinnest margin because contractors keep most of the fee, yet it lands within weeks and uses capacity the firm already pays for. Shop and fleet reports are the smallest stream, moving from 8.8% to 10.5% of revenue.
Month by month in 2027
| Month | Insurer field appraisals | Desk reviews, supplements and re-inspections | Body shop and fleet reports | Catastrophe response (hail, wind, ice) | Total revenue | EBITDA |
|---|---|---|---|---|---|---|
| Jan 2027 | $6,000 | $1,500 | $795 | $5,625 | $13,920 | ($21,156) |
| Feb 2027 | $9,000 | $3,000 | $1,325 | $0 | $13,325 | ($21,634) |
| Mar 2027 | $12,000 | $5,250 | $2,120 | $0 | $19,370 | ($16,782) |
| Apr 2027 | $16,000 | $7,500 | $2,650 | $0 | $26,150 | ($11,340) |
| May 2027 | $19,000 | $9,750 | $3,180 | $9,000 | $40,930 | $524 |
| Jun 2027 | $20,000 | $11,250 | $3,710 | $33,750 | $68,710 | $22,821 |
| Jul 2027 | $20,000 | $12,000 | $3,710 | $20,250 | $55,960 | $12,588 |
| Aug 2027 | $21,000 | $12,750 | $3,975 | $0 | $37,725 | ($2,049) |
| Sep 2027 | $23,000 | $13,500 | $4,240 | $0 | $40,740 | $371 |
| Oct 2027 | $25,000 | $14,250 | $4,770 | $0 | $44,020 | $3,004 |
| Nov 2027 | $26,000 | $14,625 | $5,300 | $0 | $45,925 | $4,533 |
| Dec 2027 | $27,000 | $15,000 | $5,300 | $13,500 | $60,800 | $16,472 |
January and February are the weakest months. Insurer field work builds through spring, June peaks on the hail event, August falls back, and a winter ice event lifts December. Operating profit before interest, depreciation and tax (EBITDA) is negative from January to April, positive in May to July, slightly negative in August, and positive again from September through December. Month-end cash bottoms out in Jun at about $23,000, found by deducting 38 days of that month's revenue from the model's month-end cash. Counting the month's revenue plus 8/30 of the previous month's as unpaid gives about $30,600 for June. The low comes in June rather than in winter because the hail event creates the year's largest unpaid invoices.
Who is on the payroll
| Role | Annual wage | Starts | Year 1 end | Year 2 end | Year 3 end | Year 4 end | Year 5 end |
|---|---|---|---|---|---|---|---|
| Founder and lead appraiser | $85,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Field appraiser | $66,000 | Month 2 | 1 | 1 | 1 | 1 | 1 |
| Desk estimator | $54,000 | Month 3 | 1 | 1 | 1 | 1 | 1 |
| Field appraiser (second) | $66,000 | Month 8 | 1 | 1 | 1 | 1 | 1 |
| Claims coordinator (part time, 25 hours a week) | $25,000 | Month 10 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Field appraiser (third) | $66,000 | Month 17 | – | 1 | 1 | 1 | 1 |
| Desk estimator (second) | $54,000 | Month 17 | – | 1 | 1 | 1 | 1 |
| Field appraiser (fourth) | $66,000 | Month 30 | – | – | 1 | 1 | 1 |
| Quality and compliance reviewer (part time, 25 hours a week) | $38,000 | Month 36 | – | – | 0.5 | 0.5 | 0.5 |
| Second senior appraiser | $76,000 | Month 46 | – | – | – | 1 | 1 |
| Total payroll incl. on-costs | $284,048 | $474,520 | $577,857 | $676,970 | $749,360 |
Dale starts alone in January. A field appraiser joins in month 2 and a desk estimator in month 3, once the first insurer panel begins sending files. A second field appraiser arrives in month 8, after the first hail season, and a part-time claims coordinator in month 10; contractors absorb overflow until month 8. In Year 2 a third field appraiser and a second desk estimator both start in month 17, ahead of the second hail season. The fourth field appraiser follows in month 30, a part-time quality and compliance reviewer in month 36, and a second senior appraiser in month 46. Each hire waits for the assignments the previous one made possible. Catastrophe contractors are not on the payroll and are paid per claim inside direct costs. The two part-time salaries, $25,000 and $38,000, cover 25 hours a week. Dale draws $85,000 from the first month, which means every profit line is stated after his pay.
Profit and loss
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $467,575 | $841,356 | $1,130,919 | $1,349,190 | $1,504,468 |
| Direct costs (appraiser mileage, contractor payments, estimating-platform fees) | ($92,274) | ($166,039) | ($223,183) | ($266,258) | ($296,901) |
| Gross profit | $375,301 | $675,317 | $907,736 | $1,082,932 | $1,207,567 |
| Payroll incl. on-costs | ($284,047) | ($474,520) | ($577,857) | ($676,970) | ($749,360) |
| Rent | ($14,400) | ($14,800) | ($15,200) | ($24,000) | ($24,700) |
| Utilities | ($3,000) | ($3,100) | ($3,200) | ($3,900) | ($4,000) |
| Marketing | ($26,000) | ($28,000) | ($30,000) | ($31,000) | ($32,000) |
| Insurance | ($17,000) | ($22,000) | ($27,000) | ($31,000) | ($33,000) |
| Professional fees | ($6,000) | ($6,500) | ($7,000) | ($7,500) | ($8,000) |
| Software subscriptions | ($18,000) | ($26,000) | ($33,000) | ($37,000) | ($40,000) |
| Licence renewals, continuing education and trade dues | ($3,000) | ($4,500) | ($6,000) | ($7,000) | ($7,500) |
| Phones, supplies and photo storage | ($4,000) | ($5,500) | ($7,000) | ($8,000) | ($8,500) |
| Equipment replacement and new-hire kit | $0 | ($7,000) | ($9,000) | ($14,000) | ($8,000) |
| Overflow contractors and overtime in peak months | ($10,000) | ($9,000) | ($11,000) | ($12,000) | ($13,000) |
| Bad debt allowance | ($2,500) | ($4,500) | ($6,000) | ($6,800) | ($7,200) |
| Annual pay raises (3% a year) | $0 | ($14,236) | ($35,191) | ($62,773) | ($94,051) |
| EBITDA | ($12,647) | $55,661 | $140,289 | $160,989 | $178,256 |
| Depreciation | ($4,500) | ($4,500) | ($4,500) | ($4,500) | ($1,000) |
| Interest | ($7,266) | ($6,550) | ($5,630) | ($4,607) | ($3,473) |
| Income tax | $0 | ($4,242) | ($27,333) | ($31,895) | ($36,494) |
| Net income before start-up costs | ($24,413) | $40,370 | $102,826 | $119,987 | $137,289 |
| Start-up costs expensed at opening (legal, credentialing and licences, launch marketing) | ($17,500) | $0 | $0 | $0 | $0 |
| Net income after start-up costs | ($41,913) | $40,370 | $102,826 | $119,987 | $137,289 |
Year 1 loses $24,413 before start-up costs and $41,913 after them. Year 2 is in profit, with low income tax because the Year 1 loss carries forward. Year 3 has the best EBITDA margin, 12.4%, since the quality reviewer starts only in its last month. The margin eases to 11.9% in Year 4, when the larger office, a full year of the reviewer and the second senior appraiser arrive together, and ends at 11.8% in Year 5.
Cash movements
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Cash from operations | ($86,092) | $5,955 | $77,179 | $101,763 | $122,123 |
| Appraiser kits and office fit-out | ($21,000) | $0 | $0 | $0 | $0 |
| Funding received | $200,000 | $0 | $0 | $0 | $0 |
| Loan principal repaid | ($3,861) | ($8,354) | ($9,275) | ($10,297) | ($11,432) |
| Owner distributions | $0 | $0 | ($40,000) | ($60,000) | ($80,000) |
| Net change in cash | $89,047 | ($2,399) | $27,905 | $31,466 | $30,691 |
| Closing cash | $89,047 | $86,648 | $114,553 | $146,018 | $176,709 |
Cash never goes negative in the base case. On the model's basis the lowest year-end balance is $86,648, at the end of Year 2, when revenue rises 80% and unpaid invoices grow by $38,914. That basis spreads receivables over the whole year. December revenue alone is $60,800, so receivables at the December run rate are nearer $73,000 than the $48,679 shown, and Year 1 closing cash on that footing is about $64,700, not $89,047. The balance stays positive on either footing. Distributions start in Year 3, when cash and retained earnings can cover them; the $40,000 paid that year leaves $48,510 of the loan outstanding at year end, and the model relies on the bank permitting it.
Balance sheet
| At year end | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Cash | $89,047 | $86,648 | $114,553 | $146,018 | $176,709 |
| Accounts receivable | $48,679 | $87,593 | $117,740 | $140,464 | $156,630 |
| Appraiser kits and office fit-out (net) | $16,500 | $12,000 | $7,500 | $3,000 | $2,000 |
| Total assets | $154,226 | $186,242 | $239,792 | $289,482 | $335,339 |
| Bank loan | $66,139 | $57,785 | $48,510 | $38,213 | $26,782 |
| Paid-in capital | $130,000 | $130,000 | $130,000 | $130,000 | $130,000 |
| Retained earnings | ($41,913) | ($1,543) | $61,282 | $121,269 | $178,557 |
| Total liabilities and equity | $154,226 | $186,242 | $239,792 | $289,482 | $335,339 |
Margins and break-even
| Measure | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| EBITDA margin | -2.7% | 6.6% | 12.4% | 11.9% | 11.8% |
| Net margin (before start-up costs) | -5.2% | 4.8% | 9.1% | 8.9% | 9.1% |
| Payroll incl. pay raises as share of revenue | 61% | 58% | 54% | 55% | 56% |
| Revenue per full-time equivalent at year end | $103,906 | $129,439 | $141,365 | $149,910 | $167,163 |
| Average monthly revenue | $38,965 | $70,113 | $94,243 | $112,433 | $125,372 |
| Monthly revenue needed to cover operating costs | $40,278 | $64,334 | $79,678 | $95,718 | $106,865 |
| Debt service cover (EBITDA / interest + principal) | -1.1x | 3.7x | 9.4x | 10.8x | 12.0x |
The test in the ratios table is whether average monthly revenue reaches the 'needed' figure. In Year 1 it averages $38,965 against $40,278 needed, a narrow miss. Year 2 averages $70,113 against $64,334. Debt service cover is below zero in Year 1 because EBITDA is negative while interest is paid, and holds above 3x from Year 2.
When assignments run 20% short
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $374,060 | $673,085 | $904,735 | $1,079,352 | $1,203,574 |
| Net income before start-up costs | ($72,683) | $15,872 | $25,841 | $19,695 | $65,708 |
| Net income after start-up costs | ($90,183) | $15,872 | $25,841 | $19,695 | $65,708 |
| Closing cash | $50,513 | $31,399 | $28,349 | $24,067 | $66,411 |
Here every revenue line, catastrophe work included, runs 20% below plan in every year. The cut stands for volume and fee pressure together rather than one named event, and it is about the size of losing all Year 1 catastrophe work ($82,125 against a cut of $93,515). Management reacts as follows: any hire due from month 13 onward slips by six months, so the third field appraiser and second desk estimator start in month 23, the fourth field appraiser in month 36 and the quality reviewer in month 42. The second senior appraiser is dropped, marketing is cut by 20%, Dale takes a 20% pay cut, the move to a larger office is put off, and Dale takes no distributions. The hires made in months 2 to 10 are not delayed, because the firm needs them to take the work it has signed. With those steps the firm closes every year with cash, never below $24,067, and turns a profit from Year 2. Inside Year 1 the low is June, at about $30,700 once unpaid invoices are counted. Equity ends Year 1 at $39,817, under a third of paid-in capital, so a bank test on net worth could be close to failing, and Dale would open that conversation with the lender early. The tightest year is Year 4, when the full team is paid against revenue 20% short. Without the response, equity would end Year 1 at $13,027 and the firm would be out of cash in Year 2, at ($101,715). A separate test removes the hail and wind claims in Year 1 only (280 claims, $63,000) and makes no other change: EBITDA falls to ($46,667), the loss after start-up costs is ($75,933), equity ends the year at $54,067, and cash stays positive in all five years without the management response, though Year 1 cash would be about $24,000 lower on the December run-rate basis.
Sources
- Bureau of Labor Statistics, Claims adjusters, appraisers, examiners, and investigators, Occupational Outlook Handbook: auto damage appraisers, 2025 jobs and self-employment, May 2025 median wage, and 2025 to 2035 outlook.
- National Insurance Producer Registry, Ohio non-resident adjuster licensing: the adjuster licence class listed for Ohio is public insurance adjuster.
- Internal Revenue Service, Standard mileage rates: 76 cents a mile for business use.
- Ohio Department of Insurance, insurance.ohio.gov: the regulator the firm asks about licensing.
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