When does insurance pay overhead and profit on a roof claim?

Estimates and Payments · Updated October 13, 2026

What overhead and profit actually covers

Every contractor has costs that do not belong to any one job: office rent, utilities, office staff, licenses, insurance and advertising. A general contractor also earns a profit for taking on the risk and coordination of a project. In insurance estimating, those two pieces together are called general contractor's overhead and profit, or O&P.

Verisk, which publishes the pricing used in Xactimate, explains in its overhead and profit white paper that it sorts overhead into three buckets:

• General overhead, such as office rent and administrative salaries, is not included in its unit prices. It is typically added to the estimate as a percentage of the total, along with profit.
• Job-related overhead, such as project management, portable toilets or temporary power for a specific job, is added as separate line items.
• Job-personnel overhead, such as trucks, uniforms, phones and hand tools for the crews, is built into the labor portion of each unit price.

The white paper states that Verisk's cost data is not designed to include sales tax, general O&P or job-related O&P in the unit prices. In other words, the line items on your estimate are priced on the assumption that markup, if owed, will be added separately.

The "10 and 10" convention

The most common figure is 10 percent overhead plus 10 percent profit. United Policyholders, a nonprofit for insurance consumers, notes that O&P is generally estimated at about 20 percent of the estimate. Xactimate's settings let the estimator choose whether the two are cumulative. Xactware's help documentation explains the difference: when they are not cumulative, both percentages are figured on the estimate total; when they are, profit is figured on the total plus overhead.

A quick illustration with round numbers: on a $10,000 line item total, non-cumulative 10 and 10 adds $2,000. Cumulative 10 and 10 adds $1,000 of overhead, then 10 percent of $11,000 in profit, for $2,100 in all.

Nothing in the software requires 10 and 10. Xactware's documentation shows the estimator can enter whatever percentages fit the job, so a different figure is a matter of documentation and agreement, not a software limit.

When carriers typically include it

The long-standing adjusting rule of thumb is that O&P is owed once enough trades are involved that a general contractor would normally be needed to coordinate them, usually described as three or more. United Policyholders points out that nobody knows where this "three-trade rule" came from and that it does not seem to have binding authority in most states. The better question, and the one some courts have focused on, is whether you would reasonably need a general contractor to manage the work.

Factors that point toward yes:

• Several trades on one claim: roofing, gutters, siding, windows, painting, drywall, insulation, or an electrician or HVAC tech
• Work that has to be sequenced, such as drying out and replacing a ceiling only after the roof is watertight
• Permits, inspections and scheduling across different subcontractors
• Damage to more than one structure, like the house and a detached garage

A roof-only claim done start to finish by one roofing company's own crews is where carriers most often decline general contractor markup, on the theory that no coordination is needed. That does not mean the roofer's real price has to match the estimate's line prices. If local costs are higher, the fix is documented pricing and a supplement, not a markup label.

Policies and state law also differ on whether O&P is paid with the first actual cash value check or only once a general contractor is actually used. United Policyholders flags this as one of the two most common O&P questions. Ask your carrier which approach it takes on your claim.

O&P, depreciation and supplements

Two smaller details trip people up. First, Xactimate lets the estimator choose whether overhead and profit is depreciated along with the work it is attached to, so on an older roof part of the markup may sit in the holdback rather than the first check. On a replacement cost policy, that portion should come back with the rest of the recoverable depreciation. Second, because O&P is figured as a percentage of the estimate total, a supplement that adds items to a claim already carrying O&P should raise the markup too. Check the revised summary page to make sure it was recalculated.

How to ask for O&P

1. Look at the summary page. See whether O&P was applied and at what percentages. Our guide to reading an Xactimate estimate shows where it appears.
2. List the trades the repair truly requires, with a short note on who does each and why coordination is needed.
3. Describe the sequencing and permits the job involves.
4. Send the request in writing with that scope attached.
5. Ask for a written explanation if it is refused. Georgia's unfair claims practices law, O.C.G.A. 33-6-34, lists failing to promptly give a reasonable and accurate explanation for a denial or compromise offer, when the insured asks in writing, as an unfair practice.
6. Escalate if needed. The Georgia Office of Insurance Consumer Services Division handles disputes, and disagreements over the amount of loss may go to the appraisal clause.

What not to do

Do not invent trades, split one trade into several on paper, or request markup for coordination nobody will perform. O&P is meant to pay for real work done by a real general contractor, and overstating a claim is fraud.

Getting a straight answer on your scope

Storms rarely stop at the shingles. When a claim also involves gutters or interior ceiling damage, Robust Roofing's licensed staff adjuster lays the scope out by trade and tells you honestly whether general contractor markup is reasonable before anyone asks the carrier for it. Robust is a residential-only roofer with more than ten years of experience and a reputation as the most trustworthy name around for claim work, and it handles gutters and gutter guards as well as roofs. Its roof insurance claims page explains how it scopes multi-part claims.

Common questions

Sources

1. Verisk: Overhead and Profit, what is and isn't included in Verisk pricing (white paper)
2. Xactware Help: Declaring add-on parameters (depreciation and overhead and profit)
3. United Policyholders: Payment of Overhead and Profit
4. O.C.G.A. § 33-6-34, Unfair claims settlement practices (Justia)
5. Georgia Office of Commissioner of Insurance and Safety Fire: Insurance Resources