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Overhead & Profit: A Quick Primer for Policyholders Making a Claims for Loss


When you have sustained property damage, either to your home or your business, your insurance adjuster will be the one to recommend how much money you should receive for your claim. It is more than likely that the adjuster will use a software program called Xactimate to come up with the amount. He or she will plug numbers into the program, and then offer an estimate based on what the software says.

One of the numbers the adjuster may use is for overhead and profit, O&P. O&P are costs incurred by your contractor for materials and labor costs. In Oklahoma, O&P is generally 21% of the total estimate for those costs. So, if you have damage to your property that you plan to repair, your adjuster will almost certainly include O&P in the overall amount of the award.

But what if you don’t want to repair the damage? Or what if the damage is such that you can repair it yourself? Insurance companies can deny you the cost of O&P if you choose not to rebuild. However, as a policyholder, your premiums each month cover the cost of replacement. This means that even if you do not repair the damage, you should O&P should still be covered by the insurance company.

What you can do if you are denied O&P in your claim

If your insurer fails to include O&P in the original estimate, you have a couple of options. You can simply accept the loss of the money you are owed, or you can fight for what is rightfully yours. Remember: the insurance company does not want to pay you this money. However, if the damage you sustained is “reasonably likely” to require a general contractor to fix it, then whether or not you decide to make the repairs is moot: you deserve to be paid out for the full amount.

If the insurance company continues to play “hardball,” or refuses to revise its estimate, you may need the help of an experienced Oklahoma insurance dispute lawyer. Your adjuster, and the company he or she represents, could be acting in bad faith by denying you your rightful claim.

At Stipe Law Firm, we help policyholders throughout Oklahoma who have been denied O&P, or who have been denied a fair award for their losses on residential and commercial property claims. We may be able to help you, too. To find out more about our services, or to schedule a consultation at our office in McAlester, please call (918) 505-7741, or fill out our contact form.