Gc overhead and profit

IT SEEMS TO ME THAT THE COURT HAVE MADE IT CLEAR THAT O&P IS INCLUDED IN THE PREMIUMS THAT A PROPERTY OWNER PAYS. SO WHY DO INS CO’S CONTINUE TO DENY O&P AND GET AWAY WITH IT? IS THERE A MAGIC LINE I NEED TO USE TO GET O&P?

Could you please reference the case(s) in point where this is clearly stated? From what I have seen or know, there have been SOME court cases where this has been hashed out and when it was all said and done, it seemed rather ambiguous. It also wasn’t clear to me if this covered all states or was limited to those where the lawsuits took place in.

I see some companies have their Adjusters telling contractors and homeowners that O&P is built into the Xactimate pricing. Which is BS.

NATIONWIDE AND LOUISIANA CITIZENS JUST SETTLED OUT OF COURT AND THEN YOU HAVE GILDERMAN V. STATE FARM, SALESIN V. STATE FARM, TEXAS TDI BULLITEN B-00068=08 AND B0045-98, HARRINGTON V. AMICA MUTUAL, KENTUCKY KDI MARKET CONDUCT EXAMINATION OF ALLSTATE, AND OKLAHOMA AND TEXAS RULINGS OF DOI. AND YOUR RIGHT XACTIMATE INCLUDES SUBCONTRACTOR O&P BUT NOT GC O&P.

You may note those lawsuits seem to be State oriented versus National.

I was under the impression that Xactimate DOES NOT include overhead and profit for a contractor. From my understanding, Xactimate line item charges are based upon the local market material prices and going labor rates. You might argue that profit and overhead are built into the;labor rates as one would assume they actually check the market prices in some manner.

There is also the mention of 3 trades.

All of this is incredibly ambiguous. I have heard more arguments from Adjusters than I care to remember. At one point, there were those that considered roofing to be two trades. Now, many are trying to argue they won’t pay O&P on roofing period. I heard many different arguments and explanations from Adjusters working for the same insurance company. Bottom line, it is all over the place and doesn’t seem to be consistent at all.

We have done a fairly decent job of getting paid O&P when there is interior damage along with the roof replacement.

IF YOU HAVE XACTIMATE DO A SEARCH UNDER HELP TOPIC’S ON OVERHEAD AND PROFIT AND IT WILL TELL YOU SUB’S O&P IS INCLUCED BUT NOT GC O&P.I’VE HEARD ALL THE SAME ADJUSTER BANTER THAT THEY DO NOT PAY O&P AND THE 3 TRADE BS BUT IN THE END STATE AND US DISTRICT COURT RULINGS HAVE COME DOWN ON THE SIDE OF IF A GC IS WARRANTED THEN O&P IS DUE EVEN IF A PROPERTY OWNER ACTS AS THEIR ON GC AND SOME RULINGS MENTION 3 TRADES AND SOME CONSIDER 1 TRADE ENOUGH. AT THE END OF THE DAY O&P IS INCLUDED IN THE PREMIMUN AND IS PART OF A GOOD FAITH SETTLEMENT ON ANY CLAIM. AND AS FAR AS ROOFING NOT BEING A TRADE THATS BULL, ANY TRADE SUMMARY ON MOST ESTIMATEING SOFTWARE INCLUDES ROOFING AS A TRADE.

I don’t disagree with you. I’ve only had a couple of occasions though where we got O&P for roof only. Those were small insurance companies that apparently weren’t aware of how the big guys operate.

We negotiate quite strongly when there are 3 trades. It’s one of the primary reasons we do interior work. In general, I could care less about the few hundred dollars we make on the interior work, it’s generally a PITA. But when doing that $800 of interior work gets us an additional 20% on the roof, makes it incredibly worthwhile. I feel that most of our Customers appreciate the full turnkey service as well.

What I’ve learned is that developing a good working relationship with the local Adjusters is the best way to get O&P assigned to the claim. If they don’t put it in with the initial claim, good luck arguing with the desk adjuster. Not saying I agree with it, just the way it is in many cases.

I feel Xactime don’t include O/H and P in the line items because in the peramiters there are box’s for each item. You can type in the box X amount for either item. If the line items included either one why would they offer the option for it?

As far as getting OH/P on claims it seems mostly up to the adjuster. Very often if the adjuster says no it’s NO!!! Have seen a few were there superiors decide to pay it but it’s after several phone calls.

XACTIMATE INCLUDES SUB O&P IN THE LINE ITEM PRICING,BUT YES YOU HAVE TO ENTER THE O&P FOR THE GC O&P. IF YOUR IN MN I WOULD CHECK CASE LAW I BELIEVE MN RULED AGAINST AM FAM ON THE PAYMENT OF O&P

I found out there is a white paper put out by Xactimate that covers this in great detail. They describe three types of O&P, General Contractor’s, Job Related (example: Onsite Project Management) and Job Personnel which is non wage related expenses such as vehicles, tools, uniforms, etc…

The General Contractor O&P is the one you add in the parameters tab under claim info. Job Related could be added as a separate line item. Neither are built into the standard line item pricing. The Job-Personnel Overhead is built into the line item pricing.

This white paper can be downloaded by logging into your Xactimate account and looking in Helpful Download links.

Roofing only and there is usually no point trying for O&P.

However, as someone posted above, add other work like interior repair, gutters, etc and you MUST get it.

Sometimes we try with the field adjuster and if rejected, we try with inside adjuster. Ya never know.

[quote=“PeteW”]Roofing only and there is usually no point trying for O&P.
However, as someone posted above, add other work like interior repair, gutters, etc and you MUST get it.
Sometimes we try with the field adjuster and if rejected, we try with inside adjuster. Ya never know.[/quote]

The reason why insurance companies get away with it is because contractors roll over and allow it. I get O&P on every job i do even if it is just the roof. You have to research your states findings on the matter. I’m in Texas which luckily our Insurance commisioner released a bulletin telling the insurance companies that if they don’t pay the O&P they are in violation. Do the Insurance companies still fight it? Of coarse they do because the $500 penalty they pay on the person that actually complains is far less then voluntarily paying O&P on every claim they do.

Xactimate and Overhead and Profit is a big can of worms. I’ll probably open up a whole can of worms on this one. Hopefully, I don’t get to many “none of your business” replies.

Frankly, I don’t know what to think As an adjuster, I work with many carriers and the directives are all over the board.

Some say no O & P on less than three trades. Some say no O & P on roofing. Some say O & P applies in “complex” repairs. I’ve even had a few request the contractors license, workman’s comp certificate and registry with the state to determine if they are registered as a general contractor.

What I think the true question should be is how much cost is there to a roofing company to perform a roofing job?


Take Xactimate for example. Using Minneapolis, MN as the example, the current hourly labor rate paid by Xactimate is $75.12 per hour per man. It is broken down as follows:

A). Worker’s Wage = $26.15
B). Labor Burden = $30.88
C). Labor Overhead= $18.09

Worker’s Wage is the amount paid to the worker as an hourly rate.

LaborLabour Burden is employer contributions to federal and state taxes and insurance. Examples are FICA, State and Federal Unemployment (referred to as LaborBurden Taxes), Worker’s Comp, General and Pollution liability insurance, and fringe benefits.

LaborLabour Overhead is intended to account for all additional costs incurred, and internal markups required by the employer to arrive at the billable hourly rate for the tradesperson. Some examples of costs that can be included in LaborLabour Overhead are such items as non-employee-owned tools, vehicle operational costs, uniforms, markup on material and laborlabour, sub-contractor, O&P, etc.


We all know that Xactimate hss internalized costs that are not well defined. They say that they include some sort of O & P. How much? Your guess is as good as mine.

I wonder how Xactimate goes about getting its pricing? They state that they monitor materials and labor. They say they do surveys with suppliers, contractors, local labor statuistics, and insurance carriers throughout the country to keep up with the most current costs.

I’ve been an adjuster for 20+ years and I’ve only ever seen one contractor who was part of Xactimate’s surveys.

Shouldn’t the goal be to figure out a proper cost for materials and equipment, labor with benefits, reasonable overhead and a profit margin?

I read on this forum all the time that many of you state that insurance does not pay enough. However, I don’t recollect seeing anything backing it up.

Frankly, I don’t expect a homeowner to have to hire “Chuck in a truck”. They shoud be able to hire a reputable company that does things the right way.

I have several questions about the business side of roofing. For this discussion, nevermind materials as those can be easily quantified,

  1. How many jobs per year should a roofing company with two full time crews need to be running a well managed business?

2). How much on a percentage basis in profit is needed for a roofing business to stay in business long term?

3). How much per man hour is needed to have your own workers, pay workman’s comp, taxes, benefits, insurance, and your overhead?

4). Lastly, should the “Chuck in a trucks” command the same dollar that the legitimate company charges? How do you stop them?

Sorry for all the questions, but, never owning a roofing company, I am attempting to get an understanding for the cost side of the business.

jt dew:
You have about $75 figured in there.
I’ve never subscribed to Exactimate.

In NW Indiana a few yrs.(5?) back, I saw the figure of $55 an/ hr for my region on Ins. Itemizations for roofers. Lower than the other trades listed. We are in a relatively unionized area.
I assume 55 an hr. is now low.

I am a rare bird and my Company has proper trade (roofing) insurance AND we actually carry work comp on the FIELD employees.

My costs are close to Fifty dollars per manhour. (O/head, labor and labor burdens) This is in a local industry where thirty dollars per hr is the norm.
I hope this helps you.

Ten $'s per hr. net profit is good, not great. But my volume i.e. billable m/ hrs. is relatively low. I would assume that someone billing 20,000 + hrs. per yr. would LOVE it! I don’t know who is doing that much volume and charging a profitable rate

Soooooooo Gus. Taking the High Road in the residential roofing business are you?

Let me know how that works out for you :twisted:

jtdew, I appreciate your attempt at an explanation. Perhaps you can help further. Is it not true that O&P is due the Homeowner as it is paid for by their premium. There are countless cases regarding this when you do an internet search. I’ve yet to see one where the ruling wasn’t found against the insurance company. It is also my understanding that Texas for one requires O&P to be paid on a stand alone roof replacement.

So what’s all the stuff with 3 trades? The complexity one is fabulous isn’t it, so specific and objective. Who gets to determine complexity? And WTF does a state GC license have to do with anything? Paying O&P has absolutely nothing to do with the contractor(s), the insurance contract is with the Homeowner and the check is sent to the Homeowner.

So in one scenario, you present a case for why a Contractor can’t represent the Homeowner because they would be considered a public adjuster. But in another case, the insurance company wants to see a GC license before they’ll pay O&P? So the insurance companies want to isolate the Homeowner from contractors when it is to their advantage, right? And then they want to tie the GC license into the deal when it is to their advantage? Perhaps you can somehow rationalize that for me.

Dad:

Believe me, that was no attempt at an explanation. More of a this is what I see happening right or wrong.

You ask if GC Overhead and Profit should be included. My answer to that is I don’t know. That’s why I question the data from Xactimate. That’s why I question what the real costs are for a roofing company. In the current system, it’s all smoke and mirrors.

What I do know is that an insurance policy is an Indemnity policy. Simply, it means that the policy holder is not supposed to profit or receive extra benefit when they have a loss. This means if the shingles are upgraded from a three tab to a dimenaional, the contractor should be paid whatever the increased cost.

Regarding GC overhead and profit, if there were no such thing as insurance and I had to have my roof replaced, I get an estimate from a roofer. If my pipe breaks, I call a plumber. If my furnace dies I call an hvac company. In any of those scenarios, why would I pay GC overhead and profit? Why should and insurance company?

In a perfect world, there should be no difference in the cost for repairs regardless whether insurance is involved or not. I read on these forums how some people have different pricing for insurance and non insurance work. It doesn’t make sense.

If a fire burns my roof, destroys my pipes, kills my furnace, damages the electical and such, I call a GC and then I pay his mark up.

Unfortunately, until the time comes where estimates arw written in four parts (1) Material (2) Labor (3) Overhead and (4) Profit … there will never be any real transparency or full disclosure.

Following up on the GC license thing, some carriers try to rationalize that they owe GC overhead and profit only if the contractor is an actual GC. You are exactly correct that the insurance is with the homeowner.

If the homeowner gors out and hires a non general contractor (ex. Roofer) then they would not incur “General Contractor” overhead and profit. If the homeowner does not incur it, but, is paid for it then the Indemnity principle of insurance has been violated and that is fraud.

You also asked why about 3 trades? Why. … About the only answer I could give is that the insurer probably thinks that the use of a GC is most likely with three trades or more. That is at least my supposition.

Bottom line, as a roofer you are entitled to making a profit. You are entitled to overhead. How much? I honestly don’t know.

IMO, you should be able to have your own workers, and pay them benefits. You
should charge the same amount regardless of whether insurance is involved or not. I think that overhead and profit are not openly disclosed in the current system. 10% overhead and 10% profit is the biggest farce out there.

I asked earlier about some that some state that Xactimate is deficient in their
pricing. Given the data put forth in my previous post, how does it compare to the
real costs the roofing industry is experiencing?

[quote=“Idiot Savant”]Soooooooo Gus. Taking the High Road in the residential roofing business are you?

Let me know how that works out for you :twisted:[/quote]

Yes…if you don’t mind. You’re such an Idiot.

jtdew, the reason the insurance should pay O&P is because it is built into the premium cost paid by the Homeowner. Does the insurance premium invoice break down where the premium costs are spread out across the house? Do they state how much of that premium is paid to the Agent for commissions? How much is intended to be for the insurance company’s overhead and profit? Of course it doesn’t. So why would you think the Contractor should provide the insurance company with a detailed breakdown?

Why does the state of Texas rule that all Homeowner claims will include O&P, even a stand alone roof replacement? Isn’t a RCV policy supposed to make the Home damage as new? Do you think the General Contractor and Builder had O&P in the price for that roof when the house was built?

There is ample examples on the net regarding insurance companies losing lawsuits and being penalized for withholding O&P. Read a little here nola.com/business/index.ssf/ … _in_3.html. There are many, many others.

Perhaps there wouldn’t be all the clamor over O&P if the insurance companies would even be close to scoping a roof correctly. Perhaps you can explain why the starter, ridge cap and shingles under the valley aren’t covered in the “off” number of an Xactimate claim? On a 30 square roof for example, you’re likely taking off more than 33 squares of material? Why does the insurance refuse to pay for that? Then they continue on by trying to include starter, hip & ridge cap, valley and scrap in the waste number. Perhaps you can explain then how the starter, hip & ridge cap, valley and scrap can be covered by 15% on a multi level hip roof with multiple dormers? I can show you time and time again, just from the straight factual math, how this doesn’t work at all.

Perhaps you can explain why the insurance will pay for a skylight flashing kit but refuse to pay for a detach & reset to cover the labor? They typically pay less than actual cost on the flashing kit. And why will they cover interior damage that is obviously coming from a sidewall flashing but refuse to pay any flashing repairs as part of the roof replacement? And why have they suddenly, in the past 6 months or so, decided they will no longer apply the waste factor to the replace number for steep, double steep and high charges? Did someone invent something in early 2010 that changed the way the roof went on to allow for this efficiency improvement?

So you want the contractor to provide detailed information about their bid when you can’t even get any kind of reasonable explanation for the unfair claim practices routinely deployed by the insurance company hundreds and thousands of times daily?

jtdew, how often do you pay additional labor and waste for eyebrows on front gables? Have you ever tried yourself to replace a hip return eyebrow on the second story? You know what, most of the adjusters I’ve seen don’t even draw them into the Xactimate sketch, they leave them out completely. “Aaahh, don’t worry about it, they’re only a couple of shingles.” Why don’t you go to the job sometime and see what is involved in replacing these and then tell me “it’s just a couple of shingles.”

From where we sit, it would seem the insurance companies look for every single possible way they can screw the Homeowner and the Contractor out of every penny they can. And way too many Adjusters don’t professionally scope the claim, they simply do what the company tells them to do, compromising their professional integrity completely.

1 Like

What A.D. said, exactly.

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jtdew quote:“Folks, I work in the insurance industry (full disclosure). All that is really happenning in Minnesota and some other states is that some of these contractors have crossed over a line.”

Full disclosure? Not quite. Unless I missed something, your “disclosure” doesn’t disclose much of anything other than a very general and unclear description of your occupation. Your posts however, clearly disclose a bias towards the P&C insurance industry. Why no true “full disclosure” under your profile link? Why not reveal what you do in the insurance industry so others will have a better understanding of how you arrive at your conclusions/opinions…