What overhead and profit covers
Overhead and profit (O&P), also called general contractor overhead and profit (GCOP), pays for the general contractor's cost of running a job plus a profit margin. Overhead covers supervision, scheduling, permit coordination, and general management. Profit is the contractor's margin. It is commonly written as 10 and 10 (10 percent overhead, 10 percent profit) applied to the repair subtotal, though the exact figures can vary.
When O&P is owed on a Florida claim
The usual test carriers apply is whether the use of a general contractor is reasonably likely. A widely used estimating rule of thumb is that a job involving three or more trades (for example a roofer, a drywall crew, and a painter) reasonably requires a general contractor to coordinate them, so O&P belongs in the estimate. On a replacement cost policy, O&P is part of the replacement cost, and if it is depreciated it becomes recoverable once repairs are completed.
How carriers underpay O&P
- Omitting O&P entirely on multi-trade losses
- Applying it to labor only instead of the full subtotal
- Depreciating O&P and then never releasing the holdback
The counter is documentation: list the trades the repair actually requires. If a general contractor is reasonably needed, O&P is part of the loss.