The Secret to Getting General Contractor O&P Approved

It’s the most dreaded conversation in the restoration industry. You’ve scoped the loss, built a solid estimate, and organized the trades—only for the adjuster to look you in the eye and say, "We don't pay O&P on this claim because there aren't three trades."

Stop leaving money on the table. General Contractor Overhead and Profit (O&P) isn't "bonus money"; it is the lifeblood of a sustainable construction business. If you are coordinating the job, incurring the risk, and managing the timeline, you earned it. But knowing you earned it and getting the carrier to pay it are two different things.

At Boss Up Solutions, we see thousands of estimates. The contractors who get paid O&P aren't just lucky; they follow a specific, proven framework to demonstrate complexity and necessity. Here is the definitive guide to getting your O&P approved.

How to Get General Contractor O&P Approved

To get General Contractor Overhead and Profit (O&P) approved, you must prove that the project requires the coordination and supervision of a General Contractor, rather than just a simple trade repair.

This is achieved by documenting the complexity of the project (not just the number of trades), citing the Verisk/Xactimate White Paper which states unit prices do not include GC overhead, and providing evidence of incurred administrative costs. Successful approval relies on shifting the argument from arbitrary "policy rules" to the legal standard of "reasonably incurred costs" necessary to restore the property.

The Real Definition of O&P (It's Not Just 'Bonus Money')

Before you can defend O&P, you must define it correctly. Many adjusters treat O&P as a generic markup. In reality, it covers two distinct financial realities of your business:

• Overhead (10%): This covers the fixed and variable costs of running your business that are not chargeable to a specific line item. This includes your office rent, general liability insurance, administrative salaries, software subscriptions (like Xactimate), and marketing.

• Profit (10%): This is the return on investment for the risk you take. Construction is a high-risk industry. Profit is the reward for financing the job, managing liability, and executing the work.

'General Overhead' vs. 'Job Overhead'

A critical distinction often missed is the difference between General Overhead and Job Overhead. General Overhead refers to your back-office expenses. Job Overhead refers to costs incurred specifically for that project, such as temporary toilets, site supervision hours, or dumpsters.

Pro Tip: Never let an adjuster tell you that "O&P covers the dumpster." It does not. The dumpster is a direct job cost (Job Overhead) and should be a line item. O&P is for the costs they can't see on the job site.

The 'Three Trade Rule' is Dead: Why Complexity Wins

The "Three Trade Rule" is the biggest myth in the insurance restoration industry. There is no policy language in a standard ISO HO-3 policy that states "O&P is only owed if three or more trades are involved."

This rule is an arbitrary guideline created by insurance companies to streamline claims handling, but it holds no legal weight. The true standard used by courts is Complexity and Coordination.

If a job involves only one trade—say, roofing—but requires steep access coordination, interior protection setup, permitting, material delivery logistics, and specialized debris removal, a General Contractor's involvement is warranted. You are not paid for the number of trades; you are paid for the management of the process.

The Secret Weapon: The Verisk/Xactimate White Paper

When an adjuster says, "O&P is included in the unit price," they are scientifically wrong. The ultimate rebuttal tool is the Verisk (Xactware) Overhead and Profit White Paper.

Verisk, the company that owns Xactimate, explicitly states in their documentation:

"The unit prices in the Xactimate price list include the cost of the material, the labor, and the subcontractor's overhead and profit. They do not include the General Contractor's Overhead and Profit."

Print this document. Highlight this section. Attach it to every estimate you send. When you use the carrier's own pricing software logic against them, it becomes very difficult for them to maintain their denial.

Step-by-Step: How to Prove 'Complexity and Coordination'

You cannot just claim complexity; you must document it. Adjusters are looking for reasons to say "simple repair." You must overwhelm them with evidence of "complex project."

1. The 'Access' Argument

Does the property have steep roofing (10/12 pitch or higher)? Is it 3 stories high? Is there limited driveway access requiring a shuttle for materials? Access issues require management. A simple roofer might walk away from a complex setup, but a GC solves the problem. Document the hours spent planning site access.

2. Redacting Subcontractor Invoices

Carriers often ask for your sub-invoices to "prove" your costs. You are under no obligation to reveal your margins, but you do need to prove the trade exists. The solution? Redact the dollar amounts. Send the invoice showing the sub's letterhead and scope of work, but black out the price. This proves a sub was used without compromising your business model.

Common Adjuster Objections (and the Exact Rebuttals to Use)

Negotiation is psychological. You need to move the conversation from "policy limits" to "business reality." Here are the scripts Boss Up Solutions recommends:

Objection: "We don't pay O&P on roofing only."
Rebuttal: "Is it your position that because this is a roofing claim, my company suddenly stops incurring overhead expenses like rent, insurance, and project management salaries? The complexity of this steep-slope install requires the same coordination as a multi-trade interior repair."

Objection: "You're not a GC, you're a roofer."
Rebuttal: "My license allows me to contract and manage this project. Whether you classify me as a 'Restoration Pro' or a 'GC', the function I am performing—hiring subs, financing materials, and assuming liability—is that of a General Contractor. The cost is incurred regardless of the title."

Calculating the Numbers: Why 10&10 is the Floor, Not the Ceiling

The industry standard is "10 and 10" (10% Overhead and 10% Profit), totaling a roughly 21% margin on top of costs. However, for many businesses, this is actually low. If an adjuster challenges the flat 10&10, you can use a Burden Rate Calculator approach.

Calculate your true overhead:

1. Sum up your annual fixed expenses (Rent, Insurance, Salaries, Utilities, Trucks).

2. Divide that by your annual revenue.

If your real overhead is 18%, and you show this math to an adjuster who is arguing about 10%, they will often revert to the 10% "standard" very quickly to avoid paying your actual rate.

Documentation Checklist: What to Send Before the Denial Happens

The best way to handle an objection is to pre-empt it. Send this "O&P Packet" with your initial estimate:

• Opening Statement Email: A template explaining that your bid includes O&P due to the project's coordination requirements.

• Project Coordination Log: A simple list of hours spent on permitting, scheduling, and material ordering.

• Subcontractor List: A list of the specific companies you are hiring (Gutter, Roof, Interior, Siding) to prove multiple entities are involved.

• Verisk White Paper snippet: The highlight mentioned above.

Legal Leverage: Key Case Law to Quote in Your Emails

While we are not attorneys, referencing case law shows you know your stuff. These cases have set precedents regarding O&P:

• Ghoman v. New Hampshire Insurance Co. (Texas): The court ruled that O&P is owed if the coordination of trades is reasonably necessary, regardless of the number of trades.

• Mee v. Safeco (Pennsylvania): Established that a General Contractor is entitled to O&P even if they do some of the work themselves, provided they are supervising the overall project.

Disclaimer: Always check the specific statutes in your state, as insurance laws vary by location.

Final Strategy: When to Negotiate and When to Appraise

Sometimes, despite your best efforts, an adjuster will dig in their heels. You need to know when to stop arguing. If you have provided the proofs of complexity, the White Paper, and the legal precedent, and they still deny O&P, it is time to move the file.

Appraisal is often the best route for O&P disputes. Appraisers and Umpires are generally more knowledgeable about construction realities than desk adjusters. They understand that a business cannot operate on zero margin. Don't be afraid to demand Appraisal if O&P is wrongfully withheld.

Ready to Boss Up Your Estimates?

Getting O&P approved isn't about luck—it's about preparation, documentation, and persistence. At Boss Up Solutions, we help contractors build undeniable estimates that justify every penny.

Don't have time to fight these battles? Let our Supplement360 team handle the negotiations and supplementations for you. We know the codes, we know the arguments, and we get results.