Insurance "never" pays Overhead and Profit

I currently have a contract with a homeowner to replace the entire roof, gutters, windows, pressure wash siding, and paint siding and fascia. She sent her insurance my estimate, which included O&P, and her adjuster sent her back a “revised” summary that was slightly higher because he updated his price list from last month’s to this month’s and wrote to her “We have reviewed the estimate and it is not approved. If you choose to use this contractor for repairs, you will have to pay the difference out-of-pocket.” When I spoke to the adjuster on the phone, his response was simply that they never pay O&P.

What would be the best response in this situation?

The Homeowner has to push back. Call the Adjuster’s Manager. And if that doesn’t work, call that guy’s Manager. Point is, it needs to be the HO fighting for it. If it is State Farm, the HO should call their Agent and enlist their help.

If you go ahead and do the work, invoice for O&P after the job is complete. Turn in redacted sub invoices to prove you incurred the cost of subcontractors.

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I swear the only reason they break it out separately in xactimate is to screw contractors and get their policy holder thinking that the adjuster is right, that there is a whole list of guys that will slap shingles for beer money.
Those contractors are trying to screw those poor insurance companies by using their own estimating program correctly against them

That’s not the only reason. Read the Xactimate White Paper. It isn’t Xactimate that’s the problem. There are various types of Overhead for example. Also, there is no hard & fast rule that O&P should be 10 & 10. In fact, O&P should not be 10 & 10. Have your accountant calculate your actual Overhead. Or if you have Quickbooks, you can easily do it. The Overhead for builders can be as low as 10% but it certainly isn’t for regular General Contractors. My company’s Overhead is 18% and that is low for people in our business.

Learn how to utilize your Customers, the Policy Holders, to push for O&P and have it paid more often instead of blaming Xactimate. The former will get you paid more money, the latter will get you nowhere.


On a side note, nice job having 18% overhead! For a bigger company that’s impressive.

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Thanks Tileman. That’s because I work my ass off. LOL Part of the reason I created the web apps is with a longer view of creating the capabilities so other people being able to handle mission critical tasks I now do. I’ll be adding other modules to the web apps soon and at some point, I hope to have a full fledged CRM that will truly be designed for Roofers.


You have a lot to share if other roofers would pay attention, and I have no reason to kiss ass if anyone is wondering. Any roofer who is debt free is someone to look up to and learn from! My company does very well and we pay our bills on time but are far from debt free. Nice job.


Tileman, I would say you’re anything but an ass kisser. LOL And I respect that. Obviously, I’m blunt to a fault myself.

You’ve brought up the debt free thing several times. I have to tell you, if I would give anybody in business one tip, it would be to find a way to be debt free. Sacrifice whatever is necessary to get there. I cannot describe the feeling of comfort and no stress from being in that situation. We lived a bit frugally for quite some time in order to get there and I can sincerely say it was well worth it. It’s also paying off now that we’re looking ahead to selling the company to key employees and preparing to retire.

I just wish I had this wisdom when I was 30. I’d be retired by now. LOL But wisdom generally only comes from experience. Better late than never.


Thank you! It’s Farmers/Foremost. The HO is right on board and has already spoken to her insurance adjuster multiple times. She is the one mainly communicating with her adjuster. She explained she chose us as she knows we are a reputable local company and should not be pushed to choose someone else as he (her adjuster) was insisting she did. His response to that was that it’s not in her policy that they have to pay O&P and, therefore, she’d be responsible for the difference out-of-pocket if she chose us. We already started the roof so I’ll keep copies of my subs’ invoices.

Have your homeowner call the guy’s manager and demand O&P. No, is not stated in the policy but it’s not stated they don’t either. Homeowners policies are policies of exclusion. If it isn’t excluded it is covered. Google “case law overhead and profit” and show the homeowner. All case law I’ve seen concludes overhead and profit is owed if it is reasonable the need for a GC exists.

What materials are the siding and the fascia? GC O&P should be paid on every job. Here is the standard: “If it is reasonable likely that the insured will need to hire a GC to complete the repairs, GC O&P is proper.” BTW, in XM8, sub-contractor O&P is paid in the line items while GC O&P is not and should be added to the final total price of the job after having been cumulatively calculated. the so-called “10% & 10%” standard may or may not be appropriate in your case. See video through the link below.

This should not be considered an “ad” nor should it be considered spam. The link is to a disinterested party that simply clarifies the common consenus of when GC O&P is due.