Overhead and Profit (O&P) on Roof Insurance Claims

Somewhere in the pages of many property insurance estimates, usually near the summary math rather than the roofing lines, sit two entries most homeowners have never heard of: general contractor overhead and general contractor profit, together shorthand as O and P. On some estimates they are present. On others, for what looks like the same kind of loss, they are absent. The difference is not a typo. It reflects one of the longest-running and least settled arguments in property claims: when does a repair job genuinely need a general contractor to coordinate it, and when the answer is yes, should the estimate carry the cost of that coordination? On a full asphalt replacement, which runs $9,000 to $18,000 in Macomb County, the answer can move the paid scope by thousands of dollars, which is why the question keeps ending up in front of regulators and courts. This guide explains what O and P is, where the familiar ten and ten convention comes from, the trade-count rule of thumb carriers often apply, and where the honest disagreements live. One caveat before any of it: whether O and P belongs on your estimate depends on your policy, your loss, and your carrier's position, and no roofing contractor, including us, can promise you are owed it. What we can do is make sure you understand the line items well enough to ask the right questions.

01 / THE SHORT ANSWERWhat overhead and profit actually is

Start with what the words mean in the construction trades. Overhead is the cost of running the business that manages a project: supervision, scheduling, permits and paperwork, insurance, office staff, the project manager's truck and phone. Profit is the margin the coordinating contractor earns for taking responsibility for the whole job. Neither one is a trade cost. The shingle price, the crew labor, and the dumpster are already in the estimate's line items. O and P is the layer on top, and it exists because coordinating multiple trades is real work that someone has to be paid to do.

In insurance estimating, O and P usually appears when the loss is complex enough that a reasonable homeowner would hire a general contractor rather than call each trade directly. Picture a wind loss that damaged the roof, tore off gutters, cracked a window, and soaked a bedroom ceiling. Repairing that means a roofer, a gutter installer, a glazier, a drywaller, and a painter, sequenced correctly so the drywall does not go in before the roof stops leaking. Somebody has to run that sequence. When an estimate anticipates a general contractor doing so, it typically adds overhead and profit to the summary; when the loss looks like a single-trade repair, it typically does not. That is the concept in one sentence, and nearly everything else about the topic is argument over where the line sits.

02 / TEN AND TENWhere the ten and ten convention comes from

The arithmetic most of the industry uses is called ten and ten: overhead calculated at 10% of the repair cost, and profit calculated at another 10%. The convention is old, it predates modern estimating software, and it is a market shorthand rather than a law. Real general contractors charge what their markets bear, sometimes more than ten and ten, occasionally less. But the convention is so entrenched that estimating platforms build it in as a setting, and adjusters, contractors, and appraisers all speak in its terms. Our Xactimate explainer covers the software side of this in detail, including where the O and P toggle lives in the estimate summary.

The dollar effect is easy to illustrate. Take a storm loss scoped at $13,500 across several trades. Ten and ten computed on that base adds $2,700 to the estimate. That is not a windfall; it is the estimate acknowledging that a coordinating contractor's supervision, scheduling, and risk are part of the true cost of putting the property back. It is also, from the carrier's chair, a 20% swing on the claim, which is exactly why the qualifying question gets scrutinized so hard. The ledger below is the shape of the convention at a glance.

03 / THE TRIGGERWhen O and P applies: the trade-count question

The rule of thumb you will hear most often is the three-trade test: if a loss requires three or more trades to repair, many carriers consider a general contractor reasonably necessary and include O and P. The test is common, but it is a guideline, not a universal standard, and industry commentary has criticized treating it as a bright line. Some losses involving two trades genuinely need coordination; some losses touching four trades are so light in each that a homeowner could plausibly sequence the calls themselves. Complexity, not arithmetic, is the underlying idea: how many trades, how tightly they must be sequenced, how much supervision the work needs, and whether repairs span multiple areas of the home.

Now apply that to roofing. A roof-only claim, shingles and nothing else, is a single-trade job, and carriers often exclude O and P on that basis. But real storm losses in Macomb County are frequently not roof-only. The August 2023 storms that put the county inside federal disaster declaration DR-4757 produced plenty of claims where wind took shingles and gutters while wind-driven rain stained ceilings, which brings drywall and paint into scope, and siding, fencing, or window trades alongside them. Whether any particular file crosses the coordination threshold is a judgment made on that file's facts. What a homeowner can do is make sure the facts are complete: a claim documented as roof-only will be evaluated as roof-only, even if the water damage in the back bedroom simply never made it into the file. That completeness problem is the same one behind our guide to underpaid roof claims.

04 / THE DEBATEThe industry argument, stated fairly

Because O and P moves real money, the disputes around it are persistent, and it is worth stating both sides honestly rather than pretending one of them is obviously right.

• The timing question. Some carriers have historically withheld O and P on actual cash value payments until a general contractor is actually hired and the cost is incurred. Policyholder advocates argue that if a GC is reasonably likely to be needed, the value belongs in the ACV payment itself. Courts and regulators in various states have gone both ways, and several notable decisions have held that O and P should be included when use of a GC is reasonably likely, whether or not one has been hired yet.
• The threshold question. Carriers generally frame O and P as owed only when coordination is genuinely necessary, and worry about paying a GC markup on jobs one crew can handle. Contractors respond that even nominally single-trade roof jobs can involve permits, inspections, decking carpentry, and interior follow-up that amount to coordination in fact.
• The self-interest question, both directions. A contractor asking for O and P has an interest in the answer, and so does a carrier declining it. Treat confident absolutes from either side, including any roofer who tells you O and P is automatic, as salesmanship rather than fact.

The honest summary is that there is no single national rule. Application standards vary by carrier, by policy language, by state law, and by the facts of the loss, and published industry and legal commentary reflects exactly that spread. What is broadly agreed is narrower but still useful: O and P is a legitimate estimating concept, the ten and ten figure is the customary measure, and the question of whether a given loss warrants it should be answered by the complexity of that loss rather than by a blanket policy in either direction. If your estimate excludes O and P and your repair genuinely spans multiple coordinated trades, that mismatch is a fair thing to raise with your adjuster in writing, and a revised estimate is one possible outcome. It is a request, not an entitlement, and it may be declined.

05 / THE PAPERWORKFinding O and P on your own estimate

You do not need special software to check your own claim. Turn to the summary pages of the carrier's estimate, after the room-by-room and slope-by-slope line items. If O and P is included you will typically see lines labeled something like general contractor overhead and general contractor profit, each usually 10%, applied to some or all of the trade totals. If it is absent, the summary runs from line-item totals to depreciation and deductible math with no markup layer in between. While you are on those pages, check three other things: whether every damaged trade appears at all, whether quantities look short, and how depreciation was applied. Our guide to claim supplements covers how missing scope gets added to an approved claim, and O and P can be part of a supplement conversation when the documented scope grows from one trade to several.

One more distinction worth keeping crisp, because it protects you in both directions. O and P is a markup for coordinating work, not free money, and a contractor's invoice should reconcile with what the work actually cost to deliver and manage. Our own pricing does not change based on what an insurance estimate allows: the price ledger we publish is the price, most Macomb County asphalt replacements land at $12,000 to $16,000, and the 60-second cost calculator will put the same published ranges against your roof before anyone climbs a ladder. If a storm contractor's math only works when inflated claim lines pay for it, that is a red flag, whatever the O and P question resolves to.

06 / THE LOCAL ANGLEThe Macomb County playbook

Here is how we suggest a Macomb County homeowner handle the O and P question without turning a roof claim into a crusade. First, document the whole loss before anyone repairs anything: roof, gutters, siding, windows, ceilings, floors. Second, read the estimate summary and count the trades the carrier itself scoped; if the carrier's own paperwork prices four trades and includes no coordination markup, you have a concrete, factual question to ask, in writing, in polite plain language. Third, if the numbers stay apart, remember the claim has formal paths: supplements, reinspection requests, appraisal where the policy provides it, and the Michigan Department of Insurance and Financial Services consumer complaint process. Escalation is a last resort, not a first move, and most files never need it.

O and P disputes are won or lost the same way the rest of a claim is: on the completeness of the file, not the volume of the argument.

Our role in that playbook is the documentation layer. A free inspection through the estimator gets you photographs of the roof and exterior condition, a written scope you can hold next to the adjuster's, and, if you want it, a contractor who can meet your adjuster on the roof to walk the findings together. We do not adjust claims, we do not promise outcomes, and we will tell you plainly when a loss looks like a single-trade repair that O and P conversations do not fit. The full claims process, from first photos to final invoice, lives on our storm and insurance claims page, and the rest of the insurance library is in the guides index.