The frequency of catastrophic events has increased considerably in recent times. As a result, impacts of such catastrophes have multiplied exponentially. It is the responsibility of the government to revive and reconstruct the communities and economies affected by disasters. Domestic institutions should be resilient enough to absorb the shocks and mitigate the impacts. Too often, damage assessments rely on quantification in terms of monetary valuations of damage. This approach has created various distortions in valuation. Damage evaluation in developed countries is higher because of the monetary value of infrastructure and housing. On the contrary, in a poor, informal settlement, the value of the damage is less, but the impact is huge from a human development perspective. The government follows a standard procedure for items and means of assistance for initiating post-disaster recovery and response. All affected families are entitled to compensation based on the damage done to life and property, irrespective of socio-economic conditions. All items are listed beforehand, with their monetary values ascertained respectively. This paper examines Leh (Ladakh, India), which was struck by heavy flash flood in the month August 2010. It explores the methodology adopted for damage assessment in 42 affected villages of Leh. This case study demonstrates the inherent drawbacks of the standard procedure and methodology in assessing post-disaster damage and needs assessments, and analyzes the role of community participation in household and community damage assessment. The paper presents recommendations for a flexible and accommodating approach for conducting damage assessments on a contextual basis.