Overhead and Profit

Robert The insurance industry is all about helping the insured. I know personally, first hand. The fire at my rental proved it. I knew what my rights were as an insured and adamantly stuck to the policy. I received every thing I was contracted to receive. Full policy value including O&P. When you purchase a policy it covers the worst case including O&P. B) :) :) B) Deep Down In Florida Where The Sun Shines Damn Near Every Day

I read that statement and i believe that if in your policy thier charging for O&P your entitled to it,but as usual the insurance industry will try and beat you out of it.And Allstate and State Farm are the worst,ciak i read your statement and if i didnt know better i would believe the insurance industry is ethical. LOL

hey hollywood i would love the opp to pick your brain a little bit about the overhead and profit issue in texas or anyone else im struggeling just getting the companys to pay it even though i have the bulletin stating the facts from tdi,,,,,,,,,, im a newer company and would appreciate any help thanks

Thanks for that info Hollywood69,

How do you handle Allstate? They show a line item showing o and p but their numbers on the roofing indicate that the o and p is just for the subtrade.

In Texas I have disputed many O&P claims with the Insurance Company and have won every time. I add O&P to any trade in which I am handling on a loss even if it is only one. The catch is knowing how to deal with them. First, if your company name is Joe Shmo Roofing then your not addressing yourself as a general contractor. Your addressing yourself as a roofer. You need to throw that little word "& construction" on the end. If your a roofing company why would they pay you O&P on 1 trade to put a roof on? The Insureds policy is calculated to include O&P. It is there right to hire a general contractor to handle the project. Be it roofing, siding, gutters windows are any other work. They pay for that right. As a general contractor your entitled to collect O&P for the work you do. If your hired as a general contractor to roof someone's house then you add O&P to the claim. Some insurance companies go as far as to try and say they don't pay O&P on roofs or it needs to be at least 3 trades or the trades are not difficult enough. I have heard them all. Bottom line is most adjusters don't have a clue on what they are talking about. I had one tell me last week on a claim I disputed that the carrier only pays for 10% waste on shingles (even for hip roofs), there is no waste on felt and that they only pay material sales tax on commercial buildings. Apparently he had 40 years experience. They hope that you as the "contractor handling the claim" don't have a clue and can not fight what they are saying. Thanks to the Texas Department Of Insurance issuing a statement telling insurance companies that they should be paying O&P I have never had a problem collecting it even on one trade.

http://www.adjustersinternational.com/AdjustingToday/ATfullinfo_fullstory.cfm?page_no=1&pdfID=43&start=1

I think this explains the game that the insurers are playing on the policy holders as well as any I've read.

Jim, O&P is a legitimate expense of repair in a property loss, and the insurance company should not dispute O&P. Contractors have to manage sub-contractors, get building permits, pay their labor, materials and the rent, and get the work done while earning a profit. Traditionally, in a homeowners, renters or business policy, insurance companies will consider O&P when there are three or more building trades involved in the repairs. For example, when there are carpenters, electricians and plumbers doing repairs, O&P is paid. However, if you only had a painter and a wallpaper hanger, most insurers would not pay O&P costs. But consider how much this could affect you. Lets say you had a fire claim with a $50,000 repair estimate. Your the general contractor handling the loss, 10% overhead is $5,000 and 10% profit is another $5,000. Together, that's $10,000 more money owed to you. When you submit your repair estimate and it has O&P built into it, make sure that the insurance company pays the O&P. It could be the difference between getting all your money or having to ask the homeowner to pay some repairs out of pocket. B) :) :) B) Deep Down In Florida Where The Sun Shines Damn Near Every Day

CIAK Said: To try and get away from the usual throw it against the wall see what sticks....... For validation, the Property Loss Research Bureau (PLRB), a recognized resource used by insurers in the interpretation of property insurance policy provisions, has taken the position that “contractors overhead and profit are included in ACV, because they are part of replacement cost. C/P from their site. Industry Custom and Practice Textbooks commonly used in the insurance industry include contractor overhead and profit as a component of repair or replacement cost. Property Loss Adjusting is a textbook for property claims adjusters published by the Insurance Institute of America for use in its industry-wide insurance designation and certification programs. It lists the following elements as comprising repair or replacement cost:

* materials * labor and employers´ burden * tools and equipment * overhead and profit * miscellaneous direct costs such as permits and taxes

B) ;) :) B)

Thanks Ciak. I am trying to get away from the "throw it and see what sticks" mentality. I'm trying to understand the underlying logic which is used to sometimes allow for O and P and sometimes not allowed. At this point in my learning curve, I can't make any sense of it.

In the cut and pasted explanation, I noticed they used the word "contractor". Is there any mention in the manuals regarding the term "sub-contractor" and "general contractor".

As you know, most general contractor's make their overhead and profit by marking up the sub-contractors work. One of the offerings (from above) mention that three trades need to be involved. Does that mean that a General Contractor is shut out of doing business on any insurance work because there are only two trades?

To try and get away from the usual throw it against the wall see what sticks....... For validation, the Property Loss Research Bureau (PLRB), a recognized resource used by insurers in the interpretation of property insurance policy provisions, has taken the position that “contractor's overhead and profit are included in ACV, because they are part of replacement cost. C/P from their site. Industry Custom and Practice Textbooks commonly used in the insurance industry include contractor overhead and profit as a component of repair or replacement cost. Property Loss Adjusting is a textbook for property claims adjusters published by the Insurance Institute of America for use in its industry-wide insurance designation and certification programs. It lists the following elements as comprising repair or replacement cost:

* materials * labor and employers´ burden * tools and equipment * overhead and profit * miscellaneous direct costs such as permits and taxes

B) ;) :) B) Deep Down In Florida Where The Sun Shines Damn Near Every Day

Vaa,

Just as you suggesterd; O&P are typically based on a particular company's operating costs and desired "profit".

In my opinioin, what they're talking about here, is either of two things; 1. Strictly opportunistic "game-playing"....albiet, "the insurance game".... or 2. A self-proclamed roofing professional that lacks a clue....

CIAK Said: Jim What did you want to know? Dont be paranoid the question was lacking. O&P is a state issue. Depends on what state your in. Same with labor rates taxes all of those things. There is a great insurance site Claims mentor. Check it out. Good luck pal.

I'm not paranoid. I'm just facing up to the fact that this forum doesn't have enough participation on certain topics.

I tossed out the subject in the most vague way intentionally. I figured someone that had a clue might lead the parade. I have no clue as to how, when, why, what they (the insurer') use as their criteria for adding in O and P...and I aim to find out. I figured that since several of the guys in here have been in the roofing business for decades, they might have some knowledge about it. I spent a few decades in the custom rough framing business and I can always add something to any framing question.

I'll check out that claims mentor site.

They vary from insurance company to insurance company. Also state to state as CIAK stated. Supposed to be based not just on 3 seperate trades but the complexity of the three trades. Do you have to schedule things around each other? such as painter, drywaller, insulation guys? Generally speaking just having facia, siding gutter roof will not cut it. Allstate is currently using Integra and they put exact cost of cheapest material in town and cheapest labor and then ad 29% for contractors overhead and profit. This is different then exactimate O&P.

Though many of the insurance companies out there today are good and honest, there are other companies that do things to bring down the entire industry. The same for roofing, contractors, car sales, real estate the list is as long for every business. For the most part, the insurance industry is one that is full of hard working, honest people who play the numbers game. They budget for claims that they have to pay out and the good companies have no problem making this happen. Some companies just don't hum the same tune. B) :) :) B) Deep Down In Florida Where The Sun Shines Damn Near Every Day

More shady-dealing insurance entertainment!

Jim What did you want to know? Don't be paranoid the question was lacking. O&P is a state issue. Depends on what state your in. Same with labor rates taxes all of those things. There is a great insurance site Claims mentor. Check it out. Good luck pal. B) :) :) B) Deep Down In Florida Where The Sun Shines Damn Near Every Day