Ger Your Overhead and Profit from Your Insurer

A man signing a document

If your insurance claim is partly accepted by your insurer, but they reject your overhead and profit costs, you may claim for breach of contract. Contractors usually charge overhead and profit, which, as a policyholder, is a part of your covered costs. O&P, as it is known, usually amounts to 20% of the total estimate. When dealing with this problem, the two most common questions arise:

  • Whether O&P is owed at all on a claim

  • Whether these amounts should have initial cash value payments included.

Before we go further if you have any issues understanding your insurance claim rejection or you need compensation come to our bad faith insurance lawyer.

The typical insurance adjustment rule of thumb is that O&P is obligated if their are three or more types of work hired. Insurers have traditionally explained that a general contractor may be necessary in order to coordinate and monitor the repair process when three or more businesses are involved, and, therefore the O&P should be included. This arbitrary rule has no precise origins and it appears to have no legal grounds.

Judges Gavel & Hammer

When different jurisdictions have a different approach, Texas courts addressed O&P questions in a federal court in 2001. In this particular case, the federal court observed this issue from the relationship between overhead and profit and the amount owed which falls under cash and replacement value provisions in the insurance policy.

The court concluded that replacement costs, from where depreciation will be deducted, should have cost included that an insured party is likely to receive while repairing or replacing a loss covered. If you believe your claim has been denied in bad faith, you should call a bad faith insurance lawyer near you.

O&P and sales tax fall in this category and fit this definition so should be included in replacement cost and cash value.

Come to The West Law Firm for an experienced bad faith insurance lawyer to guide you to get your just compensation.

** Disclaimer: The above article does not imply a relationship between attorney and client, nor is it legal advice.