Claim vocabulary
What does Overhead & Profit (O&P) mean on an insurance claim?
O&P is a 20% markup — 10% Overhead + 10% Profit — a general contractor charges to manage a complex job. On insurance estimates it's the difference between a $24,000 payout and a $28,800 payout on the same scope. It's also the line carriers leave off the first estimate most often.
What O&P actually pays for
When a job needs three or more trades — say, roofing + gutters + siding, or framing + drywall + paint — somebody has to coordinate them. That somebody is a general contractor, and their fee for the coordination work is O&P:
- 10% Overhead — covers the GC's office, insurance, supervisors, scheduling, permitting
- 10% Profit — covers the GC's actual margin
Even if you self-manage the project, most courts and DOIs have ruled that the carrier owes O&P whenever a job is complex enough to reasonably require a GC — regardless of whether you actually hire one.
The three-trade rule
Industry standard: O&P is owed when the work involves three or more trades. Here's how typical claims stack up:
| Claim type | Trades | O&P owed? |
|---|---|---|
| Hail roof replacement + gutters + siding repair | Roofing, gutters, siding | Yes |
| Water damage: drywall + paint + flooring + plumbing | Plumbing, drywall, paint, flooring | Yes |
| Roof only — single slope replacement | Roofing only | Usually no |
| Fence repair from wind | Fencing only | No |
What O&P is worth in dollars
On a $20,000 hail roof replacement, O&P adds $4,000 — that's real money. And because O&P is part of the RCV, recoverable depreciation is calculated on the higher number too:
| Line | Without O&P | With O&P |
|---|---|---|
| Replacement Cost | $20,000 | $24,000 |
| Depreciation (50%) | −$10,000 | −$12,000 |
| Deductible | −$2,000 | −$2,000 |
| First check (ACV) | $8,000 | $10,000 |
| Recoverable depreciation (2nd check) | $10,000 | $12,000 |
| Total paid | $18,000 | $22,000 |
That's a $4,000 swing on a single line item.
How to add O&P back to your claim
- 1Pull your adjuster's estimate and look at the bottom for 'O&P' or '10% O' and '10% P'. If they're missing, you have an O&P claim.
- 2List the trades involved (roofing, gutters, siding, etc.). Three or more = the standard threshold.
- 3Email your adjuster a written supplement request: 'Per the three-trade standard, please add 10% overhead and 10% profit to the [date] estimate. The job involves [list trades] and reasonably requires general contractor coordination.'
- 4Attach a contractor bid with O&P broken out as a separate line.
- 5Most carriers add it back within 1-2 weeks. If denied, escalate to a manager or file a complaint with your state DOI.
Other line items commonly left off
While you're checking for O&P, look at the bottom of the estimate for these too — all owed by the carrier on most replacement-cost claims:
- Sales tax on materials
- Permit fees (often $200-$800 for a roof)
- Dump fees / debris removal
- Code-upgrade items if you have Ordinance or Law coverage
- Starter course, drip edge, ice & water shield on roofs
Frequently asked
What does O&P mean on an insurance claim?
O&P stands for Overhead and Profit. It's a 20% markup (10% overhead + 10% profit) that a general contractor charges to coordinate a job involving three or more trades. On insurance estimates it appears as a line near the bottom: '10% O' and '10% P', or a single '20% O&P' line.
When does insurance have to pay O&P?
Most carriers owe O&P whenever the job is complex enough to reasonably require a general contractor — historically interpreted as work involving three or more trades. A roof replacement that also requires gutters and siding repair almost always qualifies. Carriers will often leave O&P off the first estimate and add it back only when asked.
How do I get insurance to add O&P to my claim?
Submit a written supplement request. Cite the number of trades involved, attach the contractor's bid with O&P broken out, and reference the 'three trade rule' or your policy's loss settlement clause. Most carriers add O&P within 1-2 weeks once asked. If they refuse and three or more trades are clearly required, escalate to a manager or file a complaint with your state DOI.
Is O&P the same as sales tax?
No. O&P and sales tax are separate line items, both owed by the carrier on most replacement-cost claims. Many estimates leave one or both off the first version. Check the bottom of your estimate for: O&P, sales tax, dump fees, and permit fees. Each is recoverable if missing.
Why did the adjuster leave O&P off?
Three common reasons: (1) the adjuster claims fewer than three trades are involved, (2) the carrier has a regional rule that overrides the three-trade standard, or (3) it's a first-pass estimate and they expect the homeowner to ask for it. The third is by far the most common — always ask in writing.
Think your estimate is missing O&P?
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Keep reading
Why Is My Insurance Payout So Low?
The six declarations-page line items that decide every underpayment.
Read moreAfter a claimInsurance Only Paid Half My Roof
Recoverable depreciation, ACV, or partial-slope approval — find which.
Read moreAfter a claimInsurance Claim Denied?
Why claims get denied and how to dispute it.
Read moreGeneral information, not legal or financial advice. O&P practices vary by carrier and state.