Overhead and Profit on Insurance Claims: What Homeowners Need to Know

What Overhead and Profit Actually Covers

When Xactimate builds a job estimate, every line item price includes the direct labor and material cost for that specific task. It does not include the business overhead of the contractor performing the work — their general liability insurance (which in DFW for a licensed roofing contractor runs $15,000-$25,000/year), workers' comp coverage, office staff, project management, vehicles, and equipment. O&P adds those business costs as a separate line — typically 10% for overhead and 10% for profit. Without O&P, an insurer is essentially telling you: hire a contractor who operates without business infrastructure, without proper insurance, and without profit. The carriers know this. They leave it off by default because most policyholders don't ask.

When Carriers Include vs Exclude O&P

The insurance industry's internal guidance has generally been to include O&P when the project requires a general contractor to coordinate multiple trades. For a straightforward re-roof with a single roofing contractor, carriers frequently argue O&P isn't warranted because no general contractor coordination is needed — the roofing company does it all. For projects that include interior damage repair alongside the roofing scope — ceiling drywall, damaged insulation, interior painting, flooring — O&P becomes clearly justified because the homeowner needs someone coordinating across trades. When JRH is managing a claim that includes interior damage alongside roof replacement, we document the multi-trade coordination as justification for O&P in the supplement.

How to Request O&P on Your Claim

If your adjuster's Xactimate estimate doesn't include O&P and you believe it's warranted, your contractor can submit a supplement with a written justification. The key elements: identification of the GC coordination required for the scope, documentation of multiple trade involvement, and the standard Xactimate O&P line items (typically line codes 10% overhead, 10% profit). Some carriers approve it on the first submission; others push back and require additional documentation. In litigation and public adjuster cases, O&P recovery is common on claims where multi-trade coordination is documented.

The Bigger Picture on Your Claim

O&P is one piece of claim maximization, not the only one. Before focusing on O&P, make sure the basics are covered: all required line items are included (drip edge, ice and water, starter, synthetic underlayment), the quantities are correct, recoverable depreciation is in your policy and you're tracking the completion process. JRH reviews adjuster estimates for clients across DFW and identifies every gap — O&P included. Call us at (469) 888-6903to go through your estimate and we'll tell you exactly what you may be leaving on the table.