Overhead and Profit (O&P)
Also called: O and P, GCOP, general contractor overhead and profit
Overhead and Profit is an allowance added to an estimate to cover a general contractor's cost of coordinating a job and their margin on it. It is normally applied where a repair is complex enough to need genuine coordination across multiple trades, and it is one of the most frequently disputed line items on a roof claim.
What it means
Overhead and profit is an allowance for the cost of running a job and the margin earned on it. Overhead covers the general contractor’s cost of coordinating the work: scheduling trades, supervising, handling permits, carrying the administrative load. Profit is the margin. On an estimate the two are typically applied together as a percentage of the job.
The idea behind it is uncontroversial. Where a repair involves several trades that have to be sequenced by somebody, that coordination is real work and has a real cost. The dispute is almost never about whether coordination has value; it is about whether this particular job required it.
Why roofs are the argument
A straightforward roof replacement is, from the carrier’s perspective, a single-trade job. One contractor removes the old covering and installs the new one. There is nobody to coordinate, so the argument for a general contractor’s overhead is weak.
Plenty of storm jobs are not that simple. A hail event that damages the roof, the gutters, the siding, the windows, and the interior finishes involves several genuinely different trades that have to be sequenced. At that point the coordination is real, and so is the case for the allowance.
The commonly cited rule of thumb is that three or more trades justify it. That is a convention, useful as shorthand and applied inconsistently across carriers and jurisdictions. It is not a statute and it should not be quoted as one. The substantive question it stands in for is whether the job needs a general contractor, and that is answered by the scope.
How it is argued
The productive route is the same as with every other scope dispute: identify the trades the job actually requires, show them on the estimate, and explain the coordination that follows from it. A scope listing roofing, gutters, siding, and interior drywall repairs makes the case largely by itself.
The unproductive route is to assert entitlement. O&P added to a single-trade roof replacement with no supporting scope invites the carrier to remove it, and tends to draw attention to every other line on the document.
Common mistakes
Treating O&P as automatic on every insurance job is the most common. It is a conditional allowance, and carriers that see it applied indiscriminately stop reading it as a considered position.
The second is confusing it with the contractor’s markup on their own trade. A roofer’s margin on roofing work is already inside the unit prices; O&P is about coordinating others.
The third is arguing it before the scope is settled. Since it is calculated on the job, the scope has to be right first, and a scope dispute resolved well often removes the need for the O&P dispute entirely.
On the call
If a caller uses the phrase overhead and profit, they are almost always relaying a contractor's complaint rather than asking a question of their own. Capture it as a scope and estimating dispute and route it to whoever handles carrier negotiation, rather than trying to resolve it on the intake call.
This is how our agents handle it on storm appointment calls and day-to-day roofing answering service intake.
Questions people ask about overhead and profit
- Is there a rule that three trades means O&P is owed?
- It is a widely used convention rather than a legal rule, and it is not applied uniformly across carriers or jurisdictions. The underlying question is whether the job genuinely requires general contractor coordination. Counting trades is a shorthand for that judgement, not a substitute for it.
- Is O&P a separate payment to the contractor?
- No. It is a line on the estimate that forms part of the claim total, subject to the same depreciation and deductible treatment as the rest. It is not a fee the carrier pays a contractor directly and it does not sit outside the settlement.
- Why do carriers remove O&P from roof estimates?
- Usually on the basis that a straightforward roof replacement is a single-trade job carried out by one contractor and does not require general contractor coordination. Where the job genuinely does involve several trades, that position is arguable, and the argument is made with the scope rather than with assertion.
Back to the full roofing claims glossary.