What Is O&P and Why Do Carriers Keep Denying It?

Overhead and profit — O&P — is the 20% markup that general contractors apply to insurance claim work. It's standard. It's recognized by Xactimate. And carriers deny it constantly.

What O&P Actually Is

O&P is made up of two components: 10% overhead and 10% profit. Overhead covers the costs of running a general contracting operation — insurance, vehicles, office, payroll administration, equipment, licensing. Profit is the margin the contractor earns for managing the project. Together they add 20% on top of the direct job costs.

Xactimate builds this into its estimating system. When you produce a Xactimate estimate, there's a dedicated O&P line at the bottom. It's not a creative addition — it's part of the standard tool carriers themselves use.

When You're Entitled to It

The industry standard — and the position supported by most state courts — is that O&P applies when a general contractor is needed to coordinate the work. This means:

• Multiple subcontractors are involved (roofing, gutters, flashing, siding, HVAC penetrations)
• The project requires coordination, scheduling, and oversight across trades
• The general contractor carries the liability and manages the project

You don't need to prove you used subcontractors. You need to demonstrate that the scope of the project — its complexity, the number of systems involved, the coordination required — justifies a general contractor role. Most residential storm claims qualify.

Why Carriers Deny It

Carriers use a few standard objections:

• "The work is single-trade." Roofing only, no other trades. Counter: document every sub-trade involved — gutters, satellite, HVAC caps, flashing, skylights.
• "You're the subcontractor." They claim you're performing the work, not managing it. Counter: demonstrate GC functions — permitting, inspection, material coordination, crew oversight.
• "Policy doesn't require it." The policy says LKQ — like kind and quality at actual replacement cost. O&P is part of actual replacement cost when a GC is needed.

The Supporting Documents That Win

The best evidence for an O&P claim is documentation of what a general contractor actually does:

• Subcontractor invoices or coordination records — showing multiple trades were managed
• Supervision logs — site visit dates, who was supervised, what was inspected
• Material receipts — documentation that materials were procured and managed
• Permit records — pulled under the GC's license, confirming the GC role

Even one of these documents significantly strengthens the argument. All of them together makes it very difficult for the carrier to maintain an O&P denial.

The Supplement Request

When supplementing O&P, the ask is direct: request the carrier's written basis for omitting or reducing O&P, and document the GC role with the evidence above. Carriers who can't articulate a written justification often concede.

The Xactimate line item is OHP (Overhead and Profit). It should appear as a percentage applied to the total direct costs. If it's missing from the carrier's EOR, that's the gap — and it's recoverable.